Need for integrated governance in energy sector

Energy is universally recognized worldwide as the most important component for economic development and human development. India’s role in the energy sector can be judged from the fact that it is the largest consumer of energy in the world after America, China and Russia. However some experts believe that the governance of India’s energy sector is very complex and it can hamper the development of energy sector in India. In such a situation, while analyzing the structure of India’s energy sector, it is necessary to consider whether various ministries and regulators related to energy can be integrated in the country.

The current form of administrative structure in the energy sector

  • Currently there are 5 different ministries and various regulatory bodies in the country to control India’s energy sector.
  • Different ministries or departments exist in the country for petroleum and natural gas, coal, renewable energy and nuclear power. At the same time we also have the Ministry of Power and state-level bodies which regulate power distribution companies or DISCOMS.
  • In addition, the presence of different regulators for each type of fuel and energy source makes work in this area more complex.
  • Petroleum and natural gas sector also has two regulators (1) Directorate General of Hydrocarbons for upstream activities (2) Petroleum and Natural Gas Regulatory Board for downstream activities.

Upstream activities

  • The upstream activities mainly relate to the initial stage of exploration and production of oil and natural gas.

Downstream activities

  • Downstream activities are generally concerned with the process and distribution of conversion of oil and natural gas into end products.

Why integration is necessary?

  • Lack of coordination between different regulators

Establishing coordination between the existing ministries and departments to control the country’s energy sector is a relatively difficult task. Each ministry and department working in the energy sector has its own goals and priorities and they focus only on those goals, which makes it difficult to achieve the targets set for the development of the energy sector. The recent step taken by Indian Railways in terms of better coordination between departments is a good example in which a total of eight services were integrated so that ‘departmentalisation’ can be done to better coordinate between departments.

  • Lack of data

The aggregation of aggregate data related to the energy sector is also a major problem. No single agency in India collects data on the energy sector as a whole and integratedly. While the data related to energy consumption is rarely available, the supply side data collected by various ministries also remain largely under suspicion. Although the Ministry of Statistics and Program Implementation performs the task of collecting and surveying data in this regard, it is also unable to perform this task at any given interval.

Models from other countries

  • Different countries have adopted different models regarding the governance of energy. In developed countries such as the United States, Germany, France and the United Kingdom, the energy sector is administered or controlled by a single ministry or department.
  • In the governance model of many countries, the Ministry of Energy or Departments is working in conjunction with other related Ministries or Departments like Environment, Climate Change, Mines and Industries.
  • For example, the United Kingdom (UK) has the ‘Department of Trade, Energy and Industrial Strategy’, France has ‘Ministry of Environment, Energy and Maritime Affairs’, ‘Ministry of Mines and Energy’ in Brazil and ‘Environment and Energy’ in Australia. Ministry ‘.
  • From all the above examples, the importance of integrated governance in the energy sector becomes clear.

Kelkar Committee

  • In 2013, the Kelkar Committee said in its report that ‘many ministries and agencies are currently involved in the management of energy-related issues, causing the problem of coordination and optimal utilization of resources to emerge as a major challenge. Efforts to increase security are also weakening. It is therefore necessary that a unified governance system should be created by integrating various agencies and ministries.

National energy policy

  • In the draft National Energy Policy-NEP, the NITI Aayog also advocated the creation of a unified energy ministry by combining the petroleum and natural gas (MoPNG), coal (MoC), new and renewable energy (MNRE) and the power ministry. Had.
  • However, the Department of Atomic Energy (DAE) was not included in this, as it is an important part of the country’s national security policy.
  • NITI Aayog had clarified in DNEP that the proposed ministry would have different agencies related to different aspects of the energy sector.
  • Such as Energy Regulatory Agency, Energy Data Agency, Energy Efficiency Agency, Energy Planning and Technical Agency, Energy Planning Implementation Agency and Energy Research (R&D) Agency.

Benefits of Unified Governance

Optimal use of resources
The Ministry of Integrated Energy will enable India to make optimal use of limited resources to meet the goals of energy security, sustainability and access. Under the present system, due to different ministries and departments, the limited resources available are not utilized as much as possible and resources are wasted.
Decision making process will be expedited
Another benefit of integration will be that it will result in faster decision making process for the development of overall energy sector of the country.
It will be possible to formulate a unified policy
In the absence of coordination between the existing ministries and departments, the formulation of an integrated and complete energy policy has become a complex and challenging task, which can become a major obstacle in the energy sector of this country. This problem can be dealt with through the integration of ministries.
Availability of quality data
Through the integration of ministries and departments, high quality data on energy demand and supply will be available, through which it will be possible to know the true state of the country’s energy sector and formulate policies accordingly.

Government’s efforts in this context

  • In the last few years, the current government has taken several important steps towards integrating the country’s energy sector, among which notable steps like appointing the same minister for the Ministry of New and Renewable Energy and Ministry of Power.
  • This move of the government was highly appreciated by the experts, as the functions of the above two ministries are closely interlinked.
  • If the same person is the head of both the ministries, then all the pending matters in this regard can be resolved at the earliest.

Road ahead

  • Although the government is making all efforts to integrate the energy sector, the path is still long.
  • The NEP’s recommendations on reforms in energy governance should be implemented as soon as possible, as well as due diligence given the drastic impact of the recommendations on the current bureaucratic structure.
  • Such a unified Energy Ministry will also help India to move step by step in view of the changes in the energy sector with the world.

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