By now, you have probably heard about the controversial Rs. 100,000-crore deal that is about the future of India’s centralised power supply, with the new prime minister promising to make the country one of the biggest emitters of greenhouse gases.
The deal will be known as the “Jaitley-Lokhran-Prasad deal” after India’s energy minister, who has long championed the idea of a single centralised pump, had recently said the country’s new prime Minister should put the entire scheme in place by the end of the year.
The deal would see a single unit of a new type of centrifugal centrifugal compressor that could run at the rate of 4,000,000 litres a second (lm/s) to help supply the country with the power it needs, along with a pump for its gas grid.
While the deal has been met with great enthusiasm, its prospects for success are being put to the test by the failure of one of its main components, the centrifugal system, which is now being replaced by a more efficient unit, said Prasad Prasaran, an analyst at India’s Export Promotion Council.
India is currently in the middle of a decade of austerity measures, including the closure of some state-owned power plants and the removal of subsidies, which has meant it is not producing enough electricity.
In the past three years, India has run a surplus of 4.4 million tonnes of oil, compared to a deficit of 8.2 million tonnes in 2013, according to official figures.
Despite the economic slowdown, the government is looking at how to reduce the deficit, and the most likely way is to buy back some of the country, said the official.
The decision by the Indian government to buy the unit of the centrifugals, which cost around £5 million, has led to speculation that the new government might be open to a further round of cuts.
One possibility, however, is that the government will take a different approach.
It could instead look at the future with more optimism, said Manish Singh, director general of the Centre for Science and Environment (CSE).
India’s largest producer of oil and gas, India Petrochemical Limited (IPL), will supply the new units.
It is also a possibility that the deal will not be completed as planned.
This is partly because of the cost of the new centrifugal equipment, which will be much more expensive than the equipment already in use in India, Mr Singh said.
Other factors are the need to find ways to get the new equipment to the country faster, he added.
With the new generation of centrifuges not expected to be operational for another five to 10 years, there is a need for better ways of reducing the reliance on fossil fuels, said Prof. Pramod Mahajan, head of the International Centre for Nuclear Research (ICNR), an international nuclear research centre in Hyderabad.
However, India is not the only country to run out of its centralised gas grid and that is a huge concern, he said.
India’s oil output has fallen by 20 per cent since 2010, while India’s coal consumption has fallen significantly.
“We need to think beyond fossil fuels,” said Prof Mahajans expert on energy policy, M.R. Anant.
An Indian centralised electricity grid needs to be connected to every state, he noted, adding that the situation in India could be similar to that of Pakistan where the country is relying on the imports of fossil fuels for power generation.
India is also the world’s largest importer of coal, with about a third of its power coming from coal-fired power plants, according the Energy and Resources Ministry.
A decision by Mr Modi to scrap the nuclear deal is also likely to raise fears of a major disruption in the supply of electricity to India’s cities.
Since Mr Modi became prime minister, he has made major energy reforms, including setting up a new energy ministry, a new grid and an energy policy committee to help the government deal with the challenges of the coming power shortage.
He has also announced that a national gas grid will be constructed to provide power to the entire country.
For the first time in nearly a century, India will have to use the export-led model of its energy industry, said Ms. Prasansan.
We have seen the impact of these reforms in a number of ways, she said.
But we also have to be aware of the future.
We have to think about how to make India a net exporter of energy, said Mr Prasan.