The per capita Power consumption in India is increasing manifolds since Independence,due to various factors like rapid industrialization and factors like Rural electrificationunder “Rajiv Gandhi Grameen Vidyutikaran Yojna”. Since independence over 500,000Villages are electrified but we still have lot to achieve. According to CEA 81% of thevillages have been electrified till 31.05.07.Coal accounts for over 70% usage as a fuel for power generation. But due to climaticconstraints and Kyoto Protocol considerations other fuel should be considered such asnatural gas that not only have high calorific value but also environment friendly and willalso help in gaining carbon credits, which will be the another source of income for power generating companies. Huge gas finds have been announced in KG basin and Cauvery basin. Currently, India meets 70% of its energy requirements through imports. But asthere are new natural gas reserves are found by RIL whose production is expected to startin mid-2008 which is estimated to produce 80mmscmd and one of the biggest and mostsignificant discoveries of natural gas by GSPC whose production is expected to start in2009, which is estimated to produce 65million to 70 million standard cubic meters. Itseems that natural gas will be price at market rates. This has left a cause of concern for the power ministry.
The risen prices are creating conflicts between power producers, Gas producers and the government. Power producer demanding less prices or high subsidy,and the natural gas producers are demanding high prices. As stated by the India’sMinistry of Petroleum that the country will have surplus natural gas in two years and itsrapidly growing economy is likely to be fueled by it after major discoveries by state-runand private energy companies.The cost of power from any plant has three major components: (a) capacity cost of plant,(b) the cost of transmission, including the losses in transmission, and (c) the fuel cost.