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Why India needs a Ministry of Energy

Vikram S Mehta writes: It would not alter the existing roles and responsibilities of the various ministries that oversee petroleum, coal, renewables and power, but would identify and handle all of the issues that currently fall between the cracks created by the existing structure.

The Ministry of Power/NTPC should also accept responsibility. For they allowed coal inventories to fall below the recommended minimum in an effort to better manage their working capital. But they, too, can justifiably pass the buck. (C R Sasikumar)

Experts may differ on the weightage to be given to the various reasons cited for the coal shortage earlier this month, but all will agree that the blame cannot be placed on the doors of any one entity or ministry. The Ministry of Coal and Coal India must certainly accept that they slipped up somewhere — whether in managing the production process, planning supplies or leaving vacant crucial leadership positions. But they should not be made to carry the can alone. The Ministry of Power/NTPC should also accept responsibility. For they allowed coal inventories to fall below the recommended minimum in an effort to better manage their working capital. But they, too, can justifiably pass the buck. They can claim they had no other option because the state government electricity distribution companies (discoms) to whom they sell power do not pay their dues on time or fully. The discoms will not, however, accept responsibility for this shortfall. They will point a finger at their political bosses, who compel them to sell electricity to residential and agricultural sector consumers at subsidised tariffs that do not fully cover the costs of procurement. This cycle of blame is the result of a structural lacuna. There is no one public body at the central or state government level with executive oversight, responsibility and accountability for the entirety of the coal value chain. This is a lacuna that afflicts the entire energy sector. It will need to be filled to not only prevent a recurrence of another coal crisis but also for the country to realise its “green” ambition.

India faces an energy and environmental problem. That reality is acknowledged by everyone. Notwithstanding, the word “energy” is not part of the political or administrative lexicon. At least not formally. As a result, there is no energy strategy with the imprimatur of executive authority. The NITI Aayog may well challenge this statement. For they have produced an energy strategy. My counter would be that it has no executive authority and, as was the case with the Planning Commission document “Integrated Energy Policy” published in 2006, most of its recommendations will gather dust because their implementation will depend on the responses of the bureaucrats in various ministries (viz petroleum, coal, renewables and power) who, in general, have little incentive to alter the status quo. The Planning Commission document was endorsed by the Cabinet and yet the majority of the recommendations were ignored.

It is against this backdrop that I offer two suggestions. I have beaten this drum before but the coal crisis and the imperatives of decarbonisation warrant, I believe, that these be placed back on the table.

First, the government should pass an Act (possibly) captioned “The Energy Responsibility and Security Act.” This Act should elevate the significance of energy by granting it constitutional sanctity; it should embed in law, India’s responsibility to provide citizens access to secure, affordable and clean energy and in that context, it should lay out measurable metrics for monitoring the progress towards the achievement of energy independence, energy security, energy efficiency and “green” energy. In essence, the Act should provide the constitutional mandate and frame for the formulation and execution of an integrated energy policy.

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Second, towards the fulfillment of this mandate, the government should redesign the existing architecture of decision-making for energy. My preference would be for the creation of an omnibus Ministry of Energy to oversee the currently siloed verticals of the ministries of petroleum, coal, renewables and power. Such a ministry did exist in the early 1980s (albeit without petroleum). The minister-in-charge should rank on equal footing with the ministers of defence, finance, home and external affairs. I suspect, however, that such an overhaul would upset too many apple carts. It would therefore be politically and administratively impractical. So, as a second-order option, I suggest the PM establish an executive department within his office; it could be referred to as the “Department of Energy Resources, Security, and Sustainability”, headed by a person of minister of state rank. The objective would not be to alter the existing roles and responsibilities of the various ministries or the reporting relationships. The PSEs would, for instance, continue to report to their line ministry. The objective would be to identify and handle all of the issues that currently fall between the cracks created by the existing structure. It would be to formulate and execute an integrated energy policy, to leverage the weight of “India Energy Inc” and maximise India’s competitiveness in its dealing with the international energy community: It would be to finance and incubate clean energy R&D and innovation; it would be to sit at the apex of the energy regulatory system and as the “regulatory ombudsman” streamline the current multiple layers of energy regulations and, finally, it would be to coordinate and implement the communication strategy to raise public awareness about existing and emergent energy-related issues, especially global warming. The department would have a narrower remit than the other energy departments but by virtue of its location within the PMO, it would, de facto, be the most powerful executive body with ultimate responsibility for navigating the “green transition”.

In this latter context, it is important to stress the positive impact the above redesign will have on investor sentiment. Several corporates have signaled their intent to invest mega bucks in clean energy. Reliance has committed $10 billion, Adani $ 70 billion over 10 years; Tata Power, ReNew Power and Acme Solar have also placed their stakes in the ground. Only their management can vouch for the strength of these commitments but there is no doubt that the probability of these investments being realised would increase if the current fragmented and opaque regulatory, fiscal and commercial systems and processes were replaced by a transparent and single-point executive decision-making body for energy.

This column first appeared in the print edition on November 1, 2021 under the title ‘Case for an energy minister’. The writer is chairman, Centre for Social and Economic Progress (CSEP)

First published on: 01-11-2021 at 05:12:12 am
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