Posts Tagged ‘energy security’

India is willing to join the NSG now, today if possible. It has all the elements in place for membership. As the 48-member NSG works by consensus, not majority, India is reaching out to every possible country, much like the push at the UNGA for reforms.

Why NSG?

  • Membership of the NSG creates a climate of predictability with regard to rules for nuclear commerce with India, giving both Indian and foreign companies the confidence to commit the resources that will be needed for the expansion of nuclear power in India. India being a price-sensitive energy market, such an outcome also helps keep the cost of nuclear power within a reasonable band by lowering the risk premium.
  • Access to technology for a range of uses from medicine to building nuclear power plants for India from the NSG which is essentially a traders’ cartel. India has its own indigenously developed technology but to get its hands on state of the art technology that countries within the NSG possess, it has to become part of the group.
  • With access to latest technology, India can commercialize the production of nuclear power equipment. This, in turn will boost innovation and high tech manufacturing in India and can be leveraged for economic and strategic benefits. For example, India has signed a civil nuclear energy co-operation pact with Sri Lanka. Currently,  this entails training people in peaceful uses of nuclear energy, including use of radioisotopes, nuclear safety, radiation safety, nuclear security, radioactive waste management and nuclear and radiological disaster mitigation.
  • Having the ability to offer its own nuclear power plants to the world means spawning of an entire nuclear industry and related technology development. This could give the Make in India programme a big boost.
  • With India committed to reducing dependence on fossil fuels and ensuring that 40% of its energy is sourced from renewable and clean sources, there is a pressing need to scale up nuclear power production. This can only happen if India gains access to the NSG. Even if India today can buy power plants from the global market thanks to the one time NSG waiver in 2008, there are still many types of technologies India can be denied as it is outside the NSG.


On the surface, India appears to have fulfilled the commitments it agreed to in exchange for the deal that ended the nuclear trade prohibition.

  • It officially implemented a separation plan, which placed 14 civilian nuclear power reactors under IAEA safeguards, leaving 8 military reactors outside of safeguards,
  • It has sustained its unilateral halt on testing nuclear explosives and,
  • In June 2014, India ratified a protocol that expanded the IAEA’s access to its nuclear sites.

Though U.S. has argued that despite its status outside the NPT, India is sufficiently like-minded regarding non-proliferation to merit membership. Some sceptics, such as Switzerland, might be amenable to this argument if India demonstrated support for non-proliferation through concrete actions. Others, such as Austria, Ireland or New Zealand,may remain opposed on principle unless India joins the NPT, which is extremely unlikely as this would require Delhi to disarm. China has also opposed India’s bid to get NSG membership on the ground that it was yet to sign the NPT.

But India defends its stance by saying that NSG members have to respect safeguards and export controls, nuclear supplies have to be in accordance with the NSG Guidelines. The NSG is an ad hoc export control regime and France, which was not an NPT member for some time, was a member of the NSG since it respected NSG’s objectives. Thus there is no need for NPT as per-requisite for India,s membership in NSG.

 As an important global partner for the United States and a leader in Asia, India’s half-in-half-out nuclear status should not remain permanently unresolved. With the US once again openly endorsing the Indian membership to the NSG in recent, India has begun preparations for the NSG plenary, scheduled to be held in Korea in June.


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As we talk about market integration in agriculture through Electronic National Agriculture Market portal and also talk about moving toward a economic union by realizing GST. Similarly power sector too need reform such that dream of one nation, one grid and one price come true. It is in 2013 that southern part of India too got connected with the National Grid System and because of that on December 29,2015 no congestion was observed in the electricity grid and single price (2.3/kwh) was  discovered on the power exchange IEX.

Similarly Open Access policy was introduced under the electricity Act 2003  which allows consumer with electricity load above 1 MW  to procure electricity directly from electricity market. Recently Indian Railways the country’s largest single costumer of electricity , has been allowed to shift its purchases to an Open Access regime. Central and state government has come forward to address the DISCOM debt problem. Thus some of these above steps in the direction to discover a single market price for power around the country.

But following challenges still remains:

  1. In 2014-15 the addition of generation capacity was 26500 MW which is much higher than the average annual addition in last five years of 19000 MW. But ability to produce more power is not matched with the  ability to lift the power. Thus power plant ran at historic low load factor of 60% and also due to the stressed discom condition.
  2. Tariff segmentation(10-12 categories are present such as Agriculture, Poultry Farm, Businesses etc) has reached hilarious level, thus complexity of tariff schedule prevents economic actors from responding sufficiently to price signals.
  3. Some states have imposed significant barriers to Open  Access Policy by imposing the cross-subsidy surcharge and additional surcharge for purchasing electricity from the power exchanges (PX) . This problem was meant to be addressed by the National Tariff Policy (2006), which established a methodology for determining the cross-subsidy surcharge to be levied on Open Access consumers, with the goal of reducing it over time. Nonetheless, cross-subsidy surcharges over the years have gone up.
  4. The growth rate of captive power generation between 2006-07 and 2014-15 is 9.3 per cent compared to 4.6 per cent for electricity procured from utilities. This trend could be exacerbated in the coming years, as the decline in oil prices and the cost of renewable energy alternatives may prompt a further shift to captive power.

Though government is committed to address DISCOM debt problem and AT&C losses issue under UDAY scheme. State governments need to rationalise Tariff segmentation from present level of 10-12 to 2-3.While Confederation of Indian Industry is demanding following measures for making single market for power :

i) A new legal architecture for making independent regulators truly independent (including the Central Electricity Regulatory Commission).

ii) Examining the concept of state regulators being replaced by a smaller number of effective regional regulators.

iii) Setting up of a National Power Distribution Company (NPDC) that begins to effectively challenge the hegemony of state-owned discoms. The NPDC can equally well fulfil other pressing objectives of picking up stranded capacities, price-pooling across diversified sources of supply (for energy security, plus encouragement to renewables), providing a national pricing benchmark as well as facilitating a rapid move towards effective Open Access.

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