$2.3 Trillion Investment For India’s Energy Sector

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India’s energy sector will need $2.3 trillion in investments by 2035, according to Asian Development Bank’s (ADB) Energy Outlook for Asia and the Pacific report.

The report said that energy pricing is a “core problem” in India and South Asia’s investment needs are the second largest at $2.4 trillion, or 20.6% of total investment requirements in Asia and the Pacific, .

“India will account for an estimated USD 2.3 trillion or 95.6 per cent of energy investment requirements in South Asia,” the report added.

The final energy demand of India is projected to increase at an annual rate of 2.7% from 2010 to 2035, a slower rate compared with projected GDP growth rate of 5.7% during same period.

“Coal will remain dominant through 2035, driven by the power sector. India will continue to account for the bulk of the energy share in South Asia at 92.5 per cent in 2035,” the report said.

ADB also said that the economic impacts of importing fossil fuel, oil, gas and coal are rising, and energy security has become a policy priority for India as energy demand expected to grow much faster than domestic energy production.

“A core problem in India is energy pricing. Oil prices are government-controlled and do not fully reflect the procurement prices. Kerosene and diesel, in particular, and even liquefied petroleum gas are priced far lower.

“In addition, electricity tariffs are also at low levels. Electricity for agricultural use, which is supported through a complex subsidy mechanism, is almost free in certain areas.”

Electricity price controls have also curtailed the motivation to invest in new power plants, further hurting electricity supply, according to the report.

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