The energy situation in India is dire - energy expert Vikram Singh Mehta issues a stark warning

The energy situation in India is dire - energy expert Vikram Singh Mehta issues a stark warning

Vikram Singh Mehta was the face of the Shell Group in India for nearly two decades until he resigned as chairman in October 2012. This expert in the field of energy is now the executive chairman of Brookings India, a think tank created and funded by key Indian corporate houses to work on high-quality research that can eventually influence policy decisions. Mehta also serves on the boards of major Indian conglomerates such as Mahindra & Mahindra, Vodafone and Colgate Palmolive.

We caught up with the career businessman as he starts work on a paper for an annual fellowship programme in London, sponsored by the Federation of Indian Chambers of Commerce and King's College London.

How do you see this academic pursuit

I have always been a reluctant businessman because business has never been part of my DNA. My father was a diplomat, my grandfather was a diplomat and I started my career as an Indian Administrative Service officer. My aspiration was always to be in public policy. I joined the private sector, but at the first opportunity went back to India and joined the government again as an economic adviser.

This new phase of my life is about doing what in some senses I have always wanted to do. I enjoyed my life as a corporate executive very much, partly because energy is a subject that straddles both the public and private sector, so this is very much a continuation of an interest that I already had.

Where does Brookings India fit in

They are a company set up as a think tank and linked to the US-based Brookings Institute, but funded by Indian business houses and individuals, including Ratan Tata, MukeshAmbani and Rahul Bajaj. Each of those has contributed the same amount of money, so no individual or corporate has more influence than any other.

Its focus is to do research on a range of subjects that, by virtue of the quality of the research, have an impact on policy. One of the major contributions to the reputation of the parent Brookings Institute is its independence. We don't take a partisan approach to any issue.

What is your aim in doing the fellowship programme in London

It is a great opportunity for me to work on a subject that has interested me for some time and actually convert my thoughts into something. I plan to work on energy, the subject I am most familiar with and take as my starting point the fact that the energy situation in India is dire.

The crisis will only get worse if we don't address the fundamentals of supply and demand and the environment. This crisis is really driven by three hard truths. Demand is surging, supply is not keeping pace with demand and the environment is under stress. The sponsors have to be commended for this fellowship. It provides a fantastic platform for people at the cross-section of policy and research to come and work on practical issues.

What are some of the conclusions you hope to arrive at

It is no good to just identify the problem or talk about what needs to be done. What needs to be done is very simple -if demand is surging, we need to contain demand; if supply is not keeping pace with demand, we need to enhance access to supplies; and if the environment is under stress, we need to make sure that we focus on cleaner and greener fuels. This is not rocket science.

What is the challenge is how we get from the diagnosis of a problem to the implementation of the solutions. That's when the political economy of energy comes into play, which involves a pragmatic approach rather than a prescriptive one, taking into account the nature of government and the way policies are developed in the energy sector.

What are some of the steps that can be taken

The aim is to take one small step forward in the right direction and create a framework by which policy can be pushed in that direction. The hope is that this will actually create the platform for a second, much larger step and that then generates the momentum which will eventually, in an ideal world, lead us closer and closer to a solution.

The reality is that the recovery rate of oil and gas in India from our producing fields is 28%, according to government of India figures. In simplistic terms, it means that only 28 of the 100 barrels that are discovered are brought to the surface and monetised.

There is actually no need to step on any political turf to raise the recovery rate of oil and gas from, perhaps, 28% to 40%. All that is needed is to do better what is already being done, using technology in a more efficient way. Maximising production is a management issue, not a political one.

Where does India stand on renewable energy

Today, 50% of the consumption of commercial energy is coal, 33% is oil, around 12% is gas and the balance is nuclear and hydro, with 1% in renewables.

Now, renewables have to be kept in a proper perspective. Today we generate about 34,000 MW of energy from renewables. The plan is to double it by the end of the 12th five-year plan in 2017 and by the end of the 13th plan in 2022 to reach 100,000 MW. That is impressive growth, but set against the totality of our energy consumption, the picture is different.

The contribution of renewables to the energy basket today is 0.75%. By the 13th plan, it will be 1.6%. The reality is that around 98% of our energy will still be coming from fossil fuels in 10 years.

What are the key aspects that you intend to research

I will be looking at how the decision-making process for energy could be made more effective. There will be discussions with the UK's Department of Energy and Climate Change, the Foreign Office and Treasury to see where lessons can be learnt. The Federation of Indian Chambers of Commerce will then hold discussions on the final paper at the government level.

The overarching message will be that we don't have to be radical when looking at implementation. My focus will be on incremental rather than any radical change, because energy is a subject that does not allow for short-term decisions. It has a very long gestation. Decisions we take today will pay off five years later. It is a subject that goes beyond the electoral cycle.

If we can come up with practical ways of changing structures, the political system will be more than willing to change things. The aim is to get the political economy of energy on a policy pathway that might lead to the shifting of the policy needle by a few degrees. The reality of governance is that politicians are overburdened and haven't had the time to focus on the aspects we'd like them to.

What is the ideal energy scenario India should be aiming for
We want to move away from fossil fuels. We have to weaken the link between economic growth, energy demand and environmental degradation. Today, this is an unhealthily strong link because our energy system is based predominantly on coal. So, we need to move away from coal and oil to gas and use renewable or cleaner fuels.

That's the ideal we have to aim for but it will not be easy to achieve. It will be a long time before we get even close to it. Meanwhile, the focus has to be on encouraging the use of gas, which is a cleaner fuel than coal and oil. We have a lot of gas in and around the country. This would involve giving the gas industry infrastructure status and that would lead to other fiscal incentives. And finally We need to invest a lot more money in R&D, because that will tell us how we can commercialise the technology of renewables.

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