KPMG India Energy Conclave Recap 2013

KPMG GLOBAL ENERGY INSTITUTE
KPMG in Indias Energy & Natural

Resources Client Conclave Recap
ENRich 2013
20 November 2013 - New Delhi
kpmg.com/in
2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
Table of
contents
Introduction
Key note address: Dr. Montek Singh Ahluwalia
Chief guest address: Dr. M. Veerappa Moily
Session 1: Energy security
Session 2: Power sector issues and opportunities
Session 3: Gas value chain
Session 4: Capital projects optimisation
Closing session: Mr. B. K. Chaturvedi
11
Feedback from panel members
15
Introduction
Its my pleasure to present to you the key highlights of
the fourth edition of ENRich 2013 KPMG Indias Annual
Energy Conclave held in New Delhi on 20 November
2013.
Mr. B.K. Chaturvedi, Member, Planning Commission,

and the speaker at the concluding session, presented a
detailed analysis of the key issues in the energy security
domain that hamper Indias growth.
With Dr. Montek Singh Ahluwalia, Deputy Chairman,

Planning Commission, Government of India, as the
keynote speaker and Dr. Veerappa Moily, Minister of
Petroleum and Natural Gas, Government of India, as the
chief guest, the packed event witnessed participation
from 180 senior industry delegates from domestic and
international organisations.
ENRich provides a one-of-its-kind opportunity to ENR

professionals to engage with key industry leaders and
policymakers and facilitate discussions on issues and
challenges that help in deciding the future of the energy
sector and, consequently, India.
The event served as a platform for key energy and natural

resources (ENR) industry professionals across the
ecosystem in the private and public sectors, regulators,
policymakers, investors and financiers and industry
analysts, among others, who came together to debate on
key challenges before the sector.
Our thought leadership on the power sector titled
Recharging the power sector by 2018 was released in
the inaugural session. This thought leadership presents
an in-depth coverage of the key issues plaguing the
power sector in India and proposes a few critical
recommendations to recharge the sector by 2018.
The four well-received panel discussions, which focussed
on the key significant themes impacting the ENR sector,
saw participation from 17 eminent industry panelists
including the high commissioners of Australia and Canada.
These panels were moderated by senior KPMG in India
professionals and focused on the following issues critical
to the energy security of the country:
In this recap document, we have included

key highlights from the sessions and some
decisive issues discussed during the event.
We look forward to your continued support,
encouragement and participation to help
us take our engaging dialogues to the next
level and welcome you to ENRich 2014.
Arvind Mahajan
Head of Infrastructure,
Government & Energy sector,
KPMG in India
Energy security
Power opportunities and challenges
Gas value chain
Capital projects optimisation
1 | ENRich 2013 KPMGs Energy & Natural Resources Client Conclave Recap
2014 KPMG, an Indian Registered Partnership and a member firm of the

KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved.
ENRich 2013 KPMGs Energy & Natural Resources Client Conclave Recap | 2
Keynote
address
Dr. Montek Singh Ahluwalia
Deputy Chairman, Planning Commission, Government of India
Dr. Montek Singh Ahluwalia, in his opening

remarks, stated that that we can achieve
economic growth only if it is supported by
adequate energy growth. He said that we have
been gradually reducing the energy intensity
of GDP and we should continue to do so.
However, even if the elasticity of energy to
GDP is less than one, then for a GDP growth of
8 per cent, the primary energy demand will still
need to grow at about 5.5 percent. He further
said that given Indias energy deficit scenario,
it is necessary that that we pay for energy and
reduce dependence on one particular energy
source. Thus, if we superimpose the need of
energy diversification with recent concerns of
climate change and carbon emissions, there
is a need to quickly move to cleaner forms of
energy. He outlined the Planning Commission's
view that the energy policy should not be a
sum-total of policies of different energy sectors
but rather there should be a comprehensive
energy policy applicable to individual energy
sectors. He said that this has not been the
situation as the respective ministries typically
make the policies.
Need to align prices to global levels: Dr. Ahluwalia

stated that various policy interventions can be undertaken
to reduce energy requirements to manageable levels. He
stressed that in order to reduce energy intensity of GDP,
any policy that underpriced energy will undermine the
objective of reducing the energy demand. Alternatively,
the other option to reduce energy demand is to enforce
mandatory standards on energy efficiency. However,
these standards would impose higher costs and the
consumers would have to bear the costs even if energy
prices do not justify. Nevertheless, he mentioned that
there is a role of regulatory enforcement on efficiency
through appropriate efficiency standards for automobiles
and energy appliances.
He observed that it is important to look at energy pricing
both from a point of view of containing demand and
increasing supply. Thus, any mechanism that keeps
energy prices below the justified price from economic
perspective will discourage supply. He highlighted that
this is especially because the plan for energy growth is not
solely dependent on the government to supply. Giving the
perspective of the Planning Commission, he mentioned
that the commission has outlined a general principle
that we need to calibrate the prices around the price of
tradable energy when the energy source is imported.
Current scenario of under-pricing: He remarked that
the factual position is that energy in India is seriously
underpriced. The proposition to increase prices may
It is important to look at energy pricing both from a point of

view of containing demand and increasing supply.
- Dr. Montek Singh Ahluwalia
2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG
International), a Swiss entity. All rights reserved.
typically not find support of industries. However, he

stated that it is important to evaluate whether such a
move to align energy prices to global prices is good for
the Indian industry. He said that it would be important
that people understand that a trajectory of rapid growth
without correcting the energy prices is not going to
happen. Dr. Ahluwalia elaborated the point of underpricing by giving the example of the coal sector. He stated
that coal constitutes about 52 per cent of primary energy
in India and that the dependence of Indian economy on
coal will decline only very gradually. The Indian coal price
is much below imported coal price even after adjusting
for calorific value and thus there is a need to align prices
to imported coal. He said that as we have rapidly become
dependent on imported coal, passing on the higher costs
of imports is unavoidable. Thus given the increasing share
of imported coal, the weighted average cost of coal is
certainly going to increase irrespective of domestic coal
prices. He highlighted the recent controversial situation of
the country facing coal shortfall despite the fact that coal
could be imported. He explained that this problem was
because of underpriced domestic coal and high priced
imported coal leading to excess demand for domestic and
no demand for imported coal.
Implications of under-pricing and new trends: He
mentioned that irrationality of built in price system
creates huge issues at the next stage where the coal is
utilised. The higher cost of energy source should typically
translate into higher electricity price. However, as the
coal price is understated, the producer cost of electricity
is also understated. He emphasised that such a pricing
cannot sustain and that there have already been steps
taken such as unbundling, passage of Electricity Act,
formation of electricity regulators that will logically lead to
price rationalisation. He observed that there is a gradual
realisation among electricity regulators on their area
of work and that they need to function independent of
various state governments. One of the most important
developments over the last one year is that many state
regulators have substantially increased their tariffs. This
is because of the realisation that if subsidised supplies
are continued then nobody is going to bail them out. He
quipped that this should translate into political realisation
as well, since political parties do not bother to check on
consequence in terms of quality and quantity of supply if

prices were to reduce.
He mentioned that the petroleum sector is also in a similar
state wherein there is a directional move to align prices to
the market. The petrol prices are deregulated, most part of
LPG is aligned to market prices and the diesel prices are
gradually being deregulated. He further said that similar
issues in the gas sector need to be resolved as there was
a huge protest on the gas pricing formula suggested by
the Rangarajan committee. Thus, going forward, it was
very important to create public mood and acceptance for
such price increase.
On the supply side, he commented that companies
will invest only if they get an economical price for the
production. He mentioned that at present ONGC gets
about 60 USD/bbl for crude oil produced in India whereas
the global prices is 110 USD/bbl. Thus, it would make
sense for ONGC to put its money abroad for exploration
than in India. Hence, it is important to sort out the under
recovery problem. In the case of coal, the issue is more
complicated, as on one hand we have substantial coal
reserves but on other hand most of our coal is under
forest. This makes it difficult to explore as it may cause
damage to forests, displace tribals etc. Thus, either we
should revise our reserve estimates or we should build in
the higher cost of accessing the coal.
He stated that the view of the planning commission is
that, the higher energy prices are globally, the bigger
the challenges in achieving higher growth, but whatever

the level of energy prices the probability that you will get
growth is high if you adjust the energy prices and low
if you dont adjust the energy prices". Thus, the energy
ministries will need to act in line with the national energy
policy for adjustment in prices that could be done over a
time period.
Role of appropriate pricing to encourage renewables:
Dr. Ahluwalia said that it is very likely that over a period
of 20-30 years we will get a substantial amount of our
energy from renewables. He cautioned that it could
happen only if we allow the cost of conventional energy
to rise so that it makes the cost of renewable energy
economical. He pointed out that as we are currently
subsidising conventional energy, there is an argument
that renewable energy also needs to be subsidised. He
said that probably the logical thing to do would be to tax
conventional energy and then subsidise renewable energy.
This will only materialise if all the major energy-producing
companies also become major renewable energy
producers because otherwise there would be huge
resistance if the conventional energy companies are taxed
and other companies rake the benefits. He held the view
that over the next ten years some implicit subsidy would
be required to make sure that renewable energy gets the
necessary kick-start and gets to a reasonable level.
Dr. Ahluwalia complimented KPMG for organising the
session on energy and expressed desire to understand
the solutions that would emerge from the discussions.
Chief Guest
address
Dr. M. Veerappa Moily
Honourable Minister of Petroleum and Natural Gas, Government of India
Dr. M. Veerappa Moily, honourable minister

of Petroleum & Natural Gas delivered a
passionate address on how India can achieve
energy security. A firm believer in Indias
potential to attain energy independence Dr.
Moily presented his vision, key priorities and
gave a brief overview of the initiatives that the
government has taken towards achieving this
strategic goal.
Dr. Moily mentioned that India is spending about USD 160
billion on oil imports and given the current trends, it will
need to import about 80 percent of its oil requirements
by 2035. He also noted that the key priorities for the
government are to increase the focus on the E&P sector,
remove bottlenecks, improve investor sentiment and
introduce appropriate reforms to help India become selfreliant. With determination to address these challenges,
Dr. Moily stated that it has become critical to address the
energy deficit scenario and likened it to Indias second
freedom struggle.
Highlighting the key initiatives taken by the government to
provide boost to the oil and gas sector, Dr. Moily said that
the ministry has issued new natural gas pricing guidelines
which recommends that gas prices will be market
determined. He also noted that the Cabinet Committee
on Investment, under the chairmanship of the Prime
Minister of India, has taken decision on several projects
that have been pending for a long time. Dr. Moily assured
the audience that the sector is likely to witness several

reforms in the near future, including the second phase of
shale policy, licensing terms with new fiscal terms and
simpler contracts, tenth round of NELP and proposed
revision in the CBM policy, among others.
Dr. Moily added that the Turkmenistan-AfghanistanPakistan-India (TAPI) pipeline has recently gathered
momentum and that gas from this pipeline will be
available in India by early-2018. He also briefly discussed
the opportunity to build a Green Energy Highway
connecting Asian countries and covering about 15,000
km through the Asian Gas Grid. He noted that India
has surplus refining capacity and highlighted that the
proposed refinery being planned in Barmer, Rajasthan
would be based on crude produced locally.
He stated that there is a huge subsidy burden in the
petroleum sector. Acknowledging the immediate need
to address the subsidy burden in the industry, Dr. Moily
made a key policy announcement of deregulating the
diesel prices in the next six months.
Dr. Moily stated that there are many obstacles, but we
need to combat them , and concluded his address by
asking the audience to have faith and determination in the
potential of the country. Dr. Moily emphasised the need
for a strong forum that can bring all stakeholders on the
same platform and drive India towards attaining energy
security. He stated that events such as ENRich the
KPMG Energy Conclave can play an important role in
taking the agenda forward.
The energy sector is likely to witness several reforms

in the near future.
- Dr. M. Veerappa Moily
2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG
International), a Swiss entity. All rights reserved.
Session 1
Energy Security
Arvind Mahajan, Partner and Head of the
Infrastructure, Government & Energy, KPMG
in India, moderated the panel discussion on
the developments in the energy sector in
India and the associated challenges around
energy security. The discussion was initiated
by highlighting the International Energy
Associations recent finding that indicates that
India and not China will be the driver of global
demand by 2020.
The panel members highlighted that, as a nation, our
exploration density is relatively less with only about 42
percent of the area being explored or under exploration.
National oil companies (NOCs) are only partially
compensated for their production, as they have to pay
subsidies as well. This requires attention, as it constraints
the outlay available with NOCs for investments. From the
perspective of private players, it was highlighted that the
key risks are geological, technological, regulatory, price
and cost risks. Exploration and production (E&P) operators
do take geological as well as technology risks, but seek
a regime wherein other risks can be managed optimally.
Thus, in a regime where regulatory risks are high, price
is controlled and costs are not under control, all the risks
are essentially on the E&P contractor. Further, the panel
also discussed the need to give impetus & R&D status to
deepwater exploration.
The current scenario of competing opportunities for the
global E&P players in east Africa, Tanzania, Venezuela, and
Myanmar owing to which limited investments are coming
to India was also discussed. It was observed that Indian
Panel Members:
Shri R. V. Shahi, Chairman, Energy Infratech & Former Secretary, Ministry of Power | Mr. Arvind Mahajan, Partner and Head of
Infrastructure, Government & Energy sector, KPMG in India | Mr. B Ganguly, President and COO (E&P), Reliance Industries Ltd. (RIL)
Mr. Sudhir Vasudeva, Chairman & MD, Oil and Natural Gas Corporation (ONGC) | Mr. Stewart Beck, High Commissioner to India, Canada
companies have also acquired global assets. The members

of the panel highlighted that certain countries have large
sovereign funds available at their disposal for acquisition of
such E&P assets. Canada has the third-largest oil deposit
in the world and a robust investment environment. The
cost of extraction from oil sands is competitive and one
of the largest Canadian refineries is building an export
terminal to export oil to India and other parts of the world.
It was agreed that the recent trends in the power scenario
were disturbing because the power sector has moved
forward in terms of installed capacities, the supporting
sector that is, fuel has not been able to keep pace.
This has led to more than 30 GW of stranded capacity.
Coal, the key fuel for the power sector, needs intervention
in the form of coal regulator and supporting coal legislation.
There is a need for long-term mine development operators
to augment the coal production capacity. The associated
issue of the clearance process also needs expedition. Gas,
as a fuel, can only be considered for the power sector if
there is adequate supply reliability and some degree of
price predictability.
The panel members expect that the renewable sector,

i.e., wind, solar and hydro, will have good traction in the
coming years. The wind sector is already competitive with
thermal power, and issues pertaining to transmission
network needs to be resolved in some cases for wind
power generators. The cost of power generated using
solar panels has reduced drastically from INR1617
kw/hr to INR6.5-6.75 kw/hr. Further, some entities are
indigenising and establishing factories to manufacture
components locally. Given the same, the National solar
mission has ambitious production targets of 20,000 MW
by 2022. In the hydro sector, several benefits such as
renewable purchase obligations are being considered.
Besides the challenges related to fuel, the financial health
of the distribution utilities also requires attention. Poor
financial health is making power generators reluctant
to import coal. The distribution companies prefer loadshedding over purchasing power. This was primarily
because many regulators did not revise the tariffs on
time. However, the scenario is likely to change, as most
regulators have recently increased the prices though they
still have not reached the actual cost of supply.
Session 2
Power sector
issues and opportunities
The power sector is facing a major challenge

in the form of weak financing for new projects
due to the current stalemate over several
projects. This has resulted in a weak project
pipeline, which poses significant risks to the
13th Five Year Plan targets. The members on
a panel, which was moderated by Santosh
Kamath, partner, KPMG in India, discussed the
various issues and challenges that hinder the
sectors growth today.
The discussion started with panelists highlighting a dismal
but important point about thermal power projects they
have not received financing for the past 30 months. A
significant amount of money is blocked in about 3035
GW of stalled projects. Power projects are currently being
financed at a higher risk (interest rate) as compared to
the projects in the road sector. This is primarily due to lack
of fuel, poor financial health of state-owned electricity
distribution companies and partial implementation of
open access system by state governments. Lack of
open access implied that generators could not access
customers directly and had to depend on discoms. Even
the pace of the power procurement process of discoms
has diminished over the last few years.
The panel noted that a severe mismatch exists between
project planning and execution in the coal sector, as
different ministries/regulators determine the pace of
development of various parts of a project. The shortage
of coal for the power sector can be met by implementing
the fuel cost pass-through mechanism, increasing the
availability of coal by increasing imports or acquiring
coal assets abroad, promoting modern technology,
enhancing transparency and establishing a trustworthy
Panel Members:
Mr. Praveer Sinha, CEO, Tata Power Delhi Distribution Ltd. | Mr. Sumant Sinha, Chairman & CEO, Renew Power |
Mr. Santosh Kamath, Partner, Infrastructure and Government Services (IGS), KPMG in India | Mr. Suneet Maheshwari,
MD & CEO, Larsen & Toubro Infrastructure Finance | Mr. Sutirtha Bhattacharya, Chairman & MD, Singareni Collieries
business environment. Some factors responsible for

the slow growth in the production of coal are related
to the challenges in acquiring land and obtaining forest
clearances.
Thats not all; the power sector also faces some
challenges related to discoms. These include high AT&C
(Aggregate Technical and Commercial) losses, tariffs
lower than the cost of production and poor financial health
of the distribution companies. Issuing supply licenses
appears to be a step in the right direction; however, state
electricity boards may not have adequate infrastructure
(metering and settlement systems). Affordability of power
for discoms is another major challenge since they are
financially not quite strong.
The panel also discussed several constraints related
to high contribution from the renewable power sector
in India. According to the panelists, the cost of project
development is high and it is difficult to acquire land and
obtain clearances. However, the process is elastic the
number of projects is expected to rise with an increase
in investments or number of companies that enter the
space. The panel also emphasised on the need for a
greater push for renewables before India can reach a

stage where it can transform the internal composition of
its energy mix.
The panel also discussed that the bottlenecks in the
power value chain seem to be shifting away from the
generation level to the distribution level to, most recently,
the fuel sector. There is an urgent need to view the sector
holistically to address the several constrictions across the
value chain.
The panel highlighted that purchasing power from solar
plants is becoming a viable option as the Ministry of New
and Renewable Energy is proposing to supply solar power
at rates comparable to power from conventional plants
and much lower than that supplied from gas plants. It was
also highlighted that electricity regulators and distribution
companies in some states are working on policy for the
integration of roof top solar with the distribution systems
to meet the peak demand. While stating that integration
of roof top solar with distribution systems will have its
challenges, the panel expressed belief that it will play a big
role in the future in meeting the peaking demand.
Session 3
Gas value chain

Gas is a vital energy source across the
globe. Shale and other gas finds have been
revolutionising the global energy balance. India,
however, is yet to catch up with the western
economies in this respect.
The members of the panel, moderated by
Bhavik Damodar, partner, KPMG in India,
brainstormed on various aspects of the gas
value chain in India.
The panelists initiated the discussion by presenting their
views on the existing distortions in the domestic gas
value chain. It was observed that the guidelines regarding
trunk pipelines transporting gas, regulations concerning
consumer industries such as power and fertiliser, and
the lack of infrastructure connecting end consumers and
LNG terminals are some of the key challenges in the
domestic gas value chain. Highlighting the importance
of LNG pricing, the panel stressed that while importing
LNG from the international market, India has to face
competition from large LNG consumers such as Japan,
Korea, Taiwan etc., and hence there is a limited scope of
pricing negotiations. The panel also mentioned that due
to regulatory constraints, most of the LNG consumers
in India purchase gas at spot price resulting in higher
cost of gas. The panel stressed on the requirement of a
base-load demand projection by domestic consumers
and entering into gas contracts on term basis to ensure
fuel supply security. Since various states follow different
tax rates, consumers end up paying substantially inflated
prices for gas. There is a growing need to rectify this trend
and measures should be adopted to build a regulatory
Panel Members:
Mr. Bhavik Damodar, Partner - Transaction Services and COO - Infrastructure and Government Services (IGS), KPMG in India
Mr. Pankaj Wadhwa, Vice President (Finance), Petronet LNG | Mr. Patrick Suckling, High Commissioner to India, Australia
Shri Anil Jain, Advisor Energy, Government of India and Former Joint Secretary, Minister of Petroleum and Natural Gas
Mr. Narendra Kumar, Managing Director, Indraprastha Gas Ltd.
platform, which do not adversely impact consumers or

suppliers.
The panel cited Australias experience in creating an
environment conducive for exploring its LNG resources.
Emphasis was laid on developing strategic relations
between the two countries by Australia becoming a
reliable LNG supply partner and meeting Indias energy
security needs. The panel highlighted the challenges that
the Australian companies face while investing in India
and emphasised on the need for increased clarity on
regulatory and policy issues, such as land acquisition and
rehabilitation. The members of the panel also discussed
new reforms such as abolishing carbon tax, repealing
mining tax, and simplifying and streamlining taxation
system that are being introduced in Australia for reducing
project costs.
The discussion then focused on the transition in the Indian
energy sector, which is being led by gas and renewable
energy domains. It was noted that the progress made by
state governments in settling arrears has led to a marked
growth in power production in the recent months. The
panel members strongly believed that the government

should be more flexible in its decision-making process and
let gas find its place as a fuel in the wider basket of fuels
in India. It was agreed that the key anchor consumers
should come together and provide demand assurance to
LNG suppliers.
The panel members contributed to the discussion
by stressing on the competition faced by City Gas
Distribution players from the subsidised LPG and
diesel, and discounted fuel oil in various consumer
segments. Some of the concerns and challenges include
stiff competition from non-serious players, the limited
availability of gas and requirement of several statutory
approvals and clearances.
The panel members also discussed about having a unified
licenses for Coal Bed Methane (CBM), Underground
Coal Gasification (UCG), and Coal Mine Methane (CMM)
extraction; LNG pricing from Qatar and Australia; higher
cost of projects in Australia; and sourcing LNG based on
Henry Hub pricing.
Session 4
Capital projects
optimisation
Sanjay Garg, partner, KPMG in India moderated
the panel discussion on Capital Project
Optimisation. The panel members deliberated
on key issues impacting project delivery in
India, and identified methods to overcome
these challenges. Specific initiatives planned
to expedite project delivery were the key
takeaways for the audience.
The panel members stressed that a formal mechanism

for project optimisation is imperative, as opposed to
implementing the traditional approach of responding to
project risks and adopting one-off internal optimisation
initiatives. It was highlighted that project optimisation
requires an approach that goes beyond planning
schedules and budgets, and optimisation requires
a consistent and continued process, involving all
stakeholders across levels. The panelists observed that
the benefits of project optimisation are highest when
optimisation processes are implemented at the project
initiation level. They also stated that engineering and
design phases are critical to target inorder to achieve
greater optimisation benefits. It was agreed that project
optimisation and risk management are the processes that
should be conducted regularly for sustained benefit.
The panelists also mentioned that the key enablers for
achieving project optimisation include implementing
global practices, professionalising project delivery
methods and practices across all stakeholders, early
identification of risks and implementing formal project
Panel Members:
Mr. Kishor Nair, President, Welspun Energy | Mr. V.R. Sharma, Dy. MD & CEO (Steel Business), Jindal Steel & Power
Mr. Sanjay Garg, Partner - Major Projects Advisory, Infrastructure and Government Services (IGS), KPMG in India
Mr. R. K. Gupta, Group CEO, UEM | Mr. Rajeev Mehrotra, Chairman & MD, RITES Ltd.
optimisation processes. The panel members further

emphasised on project optimisation and recognition for
value creators, specifically highlighting the significance
of designers and project teams in infrastructure project
lifecycle as key components for project optimisation.
They also noted that the key aspects of a project
include correct sizing, technology with balanced capital
and operational expenditure and required input and
output. Referring to the statistics by a government
body, the panelists reviewed various factors impacting
the execution of capital projects in the country. It was
deduced that there is a dearth of specialised construction
companies in India. Shortage of manpower project
engineers, project managers and labor has adversely
impacted the execution of projects. The panel recognised
that increased professionalism and project management
expertise and more project management consultants are
the need of the hour.
The panel discussed various solutions to make project
financing increasingly effective and result-oriented,
especially considering the significant capital requirements

for large projects. The concept of Deferred Dividend
Credit (DDC) was unanimously mooted by the panel.
It guarantees dividend to asset shareholders only if
projects are completed. It was observed that concerns
also exist on contractors, complications with the EPC
packages, growth in arbitration cases and lack of PF cards
for all individuals. The panelists suggested measures to
overcome bottlenecks such as the need for regulatory
changes that affect project execution encompassing
right-of-way issues, land reforms, compliance procedures
including PF deduction for labor, and unstructured taxes
and incentives.
In the light of regulatory delays, the panel members
agreed that government departments should consider
incentives for effective review and approval of projects
and also debated on the adoption of formalised cost
control and project management processes by project
management companies.
Closing
session
Mr. B. K. Chaturvedi
Member, Planning Commission, Government of India
Mr. Chaturvedi commenced his address by

sharing some key initiatives in the Twelfth
Five-Year Plan (FYP) on energy security.
According to him, 50 percent of the energy is
derived from coal, 35-40 percent from oil and
gas, 5-6 percent from hydro energy and 2-3
percent from other forms of energy, including
nuclear. This pattern is expected to continue
in the coming years. There are about 100
billion tonnes coal reserves, of which only 50
billion tonnes is recoverable. The reserves are
adequate to last for another 50-100 years, but
the biggest challenge is to recover them.
He further noted that the elimination of the principle
of go-no-go, and increasing number of coal projects
being sent to the Cabinet Committee for expediting the
clearance process are some positive developments. By
the end of this five-year plan, a large number of captive
blocks would also come up and domestic production
would increase to about 70-75 percent of the demand.
The remaining coal requirement, i.e. about 25 percent, will
be met through imports.
Mr. Chaturvedi also highlighted the views of Mr. Vijay
Kelkar who called this century as a gas century as many
gas discoveries are expected. About 200 blocks have
been auctioned until now, and, a new round of auction is
"
expected in January 2014, which will result in increased oil

and gas production.
Mr. Chaturvedi also observed that the primary thrust of
energy security in this plan has to come from renewable
energy. In the solar power sector, the FYP is to increase
the capacity to about 10,000 MW. The cost of solar power
has reduced from INR 15-17 to about INR 6.57.0 in the
latest round of bids. Estimates of Lawrence Berkley
National Laboratory suggest solar reserves of up to 2000
GW. Mr. Chaturvedi believes that owing to its terrain and
the location on the globe, India has high reserves of solar
energy. As the technology in the solar energy domain
is advancing the plant utilisation is increasing from 15
percent to 25 percent. He also highlighted that joint
research with a team from the U.S. would further improve
this.
In the wind sector, India had reserves of 48 GW, but
Lawrence Berkley estimated the reserves at 1000 GW.
There is huge potential in solar and wind sectors and,
therefore, the Planning Commission is focusing on them
in the 12th FYP. In the next five years, India plans to add
30,000-35,000 MW of capacity, excluding biomass.
Mr. Chaturvedi also emphasised that energy efficiency
is another key area of focus in this FYP. In this plan,
the focus is on increasing energy efficiency of major
consumer industries such as power, cement, refineries,
and fertilisers. Plans are being implemented to improve
the energy efficiency of electrical appliances such as TV,
Share of coal will not increase but the share of renewable in India will
increase. I hope our strategies enable us to grow at a rate of 7% to
8%.
- Mr. B. K. Chaturvedi
"
fans, fridge, and AC by introducing new technologies and

star rating systems.
Mr. Chaturvedi also mentioned about improving
efficiencies of agricultural pumps. He mentioned that
accelerated power reform systems have been launched
to enhance the transmission system and reduce T&D
losses. This system was initially launched for towns with
a population of 30,000 and it has been expanded to towns
with a population of 10,000 in the 12th FYP. This could
help to reduce our T&D losses by about 20%.
Mr. Chaturvedi stressed on the need to develop
renewable energy system, improve energy efficiency, and
enhance domestic energy production to achieve energy
security.
He also enumerated plans of developing nuclear power
capacity to 10,000 MW from the current 4,000 MW by the
end of the 12th FYP.
Photo
gallery
Feedback from
panel members
We had a very absorbing panel discussion represented
by varied sections of the industry. We had a good
discussion on issues faced by the energy industry right
from power to coal to gas to hydrocarbon. It was very
enlightening to listen to others as well.
Its a pleasure to participate in the morning session

with KPMG and we had a great opportunity to talk
about the challenges in the industry.
Mr. Stewart Beck
High Commissioner to India, Canada
Mr. Sudhir Vasudeva, Chairman & MD,

Oil and Natural Gas Corporation (ONGC)
The unique thing here is that there are lot of

professionals involved and there is seriousness about
the industry. I find its an excellent forum to talk about
issues, discuss and get to solutions.
Mr. B Ganguly, President and COO (E&P),
Reliance Industries Ltd. (RIL)
Its a great pleasure to participate in this conference

organised by KPMGall sorts of important issues
have been discussed today in this conference.
Mr. Patrick Suckling,
High Commissioner to India, Australia
The efforts taken over by KPMG in bringing people

under one roof and sharing their views was wonderful.
Mr. V.R. Sharma, Dy. MD & CEO (Steel Business),
Jindal Steel & Power Ltd. (JSPL)
Its a very useful gathering of lot of interested people

from industry, where you get to exchange new ideas,
new thoughts and dscuss interesting questions. Since
these are all a set of people who are interested in the
energy sector, thats what makes coming to this event
even more worthwhile.
Mr. Suneet Maheshwari,
MD & CEO, Larsen & Toubro Infrastructure Finance
About
KPMG Global Energy

Institute (GEI)
Launched in 2007, the KPMG Global Energy Institute (GEI) is a worldwide knowledgesharing forum on current and emerging industry issues. This vehicle for accessing thought
leadership, events, and webcasts about key industry topics and trends provides a way
for you to share your perspectives on the challenges and opportunities facing the energy
industryarming you with new tools to better navigate the changes in this dynamic
arena. To become a member of GEI, visit www.kpmg.com/energyaspac. Follow us on
Twitter, #KPMG_GEI.
About
ENRich - KPMGs Annual

Energy Conclave
ENRich is KPMG in India's flagship event for Energy & Natural Resources (ENR) sector.
The event combines high profile panel discussion sessions and brings together over
180+ senior industry delegates from India and around the globe. It provides a platform
for interactive discussions with industry leaders, government dignitaries, regulators,
business and financial executives on key themes impacting the future of the energy
sector.
For further details about ENRich, visit: www.kpmg.com/ENRich
Key Infrastructure,
Government & Energy (IG&E)
sector contacts
Other contact
Arvind Mahajan
Dinesh Kanabar
Partner and Head

Infrastructure, Government & Energy sector
T: +91 22 3090 1740
E: arvindmahajan@kpmg.com
Deputy CEO - KPMG in India,

Chairman - Sales & Markets
T: +91 22 3090 1661
E: dkanabar@kpmg.com
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Partner
Management Consulting
T: +91 22 3090 2527
E: skamath@kpmg.com
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Partner
Transactions and Restructuring
T: +91 22 3090 2126
E: bdamodar@kpmg.com
Manish Aggarwal
Partner
Corporate Finance
T: +91 22 3989 2625
E: manishaggarwal@kpmg.com
Nabin Ballodia
Partner
International Tax
T: +91 124 3074 321
E: nabinb@kpmg.com
Raajeev B Batra
Latest insights and updates are now available on the KPMG India app.
Scan the QR code below to download the app on your smart device.
Google Play
App Store
Partner and Head

Governance Risk & Compliance Services
Risk Consulting
T: +91 22 3090 1710
E: rbbatra@kpmg.com
Sachin Jain
Associate Director - Sales & Markets

Infrastructure, Government & Energy sector
T: +91 22 3090 2016
E: sachinjain3@kpmg.com
kpmg.com/in
kpmg.com/energy
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accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information
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KPMG GLOBAL ENERGY INSTITUTE

KPMG in Indias Energy & Natural

Key note address: Dr. Montek Singh Ahluwalia

Chief guest address: Dr. M. Veerappa Moily

Session 1: Energy security

Session 2: Power sector issues and opportunities

Session 3: Gas value chain

Session 4: Capital projects optimisation

Closing session: Mr. B. K. Chaturvedi

Feedback from panel members

Mr. B.K. Chaturvedi, Member, Planning Commission,

With Dr. Montek Singh Ahluwalia, Deputy Chairman,

ENRich provides a one-of-its-kind opportunity to ENR

The event served as a platform for key energy and natural

In this recap document, we have included

2014 KPMG, an Indian Registered Partnership and a member firm of the

Dr. Montek Singh Ahluwalia

Deputy Chairman, Planning Commission, Government of India

Dr. Montek Singh Ahluwalia, in his opening

Need to align prices to global levels: Dr. Ahluwalia

It is important to look at energy pricing both from a point of

typically not find support of industries. However, he

consequence in terms of quality and quantity of supply if

the challenges in achieving higher growth, but whatever

Dr. M. Veerappa Moily

Honourable Minister of Petroleum and Natural Gas, Government of India

Dr. M. Veerappa Moily, honourable minister

the audience that the sector is likely to witness several

The energy sector is likely to witness several reforms

companies have also acquired global assets. The members

The panel members expect that the renewable sector,

issues and opportunities

The power sector is facing a major challenge

business environment. Some factors responsible for

greater push for renewables before India can reach a

Gas value chain

platform, which do not adversely impact consumers or

panel members strongly believed that the government

The panel members stressed that a formal mechanism

optimisation processes. The panel members further

especially considering the significant capital requirements

Member, Planning Commission, Government of India

Mr. Chaturvedi commenced his address by

expected in January 2014, which will result in increased oil

fans, fridge, and AC by introducing new technologies and

Its a pleasure to participate in the morning session

Mr. Sudhir Vasudeva, Chairman & MD,

The unique thing here is that there are lot of

Its a great pleasure to participate in this conference

The efforts taken over by KPMG in bringing people

Its a very useful gathering of lot of interested people

KPMG Global Energy

ENRich - KPMGs Annual

Partner and Head

Deputy CEO - KPMG in India,

Partner and Head

Associate Director - Sales & Markets

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