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Infrastructure covering various sectors like energy. (power, petroleum, coal, etc.) roads, railways, ports, civil aviation, telecommunications, etc. plays a crucial role4n determining the growth of economy. Adecuate quantity, quality anY reliability of infrastiuctie are necessary preconditions for overall economic growth and development. The condition of infrastructure has also a direct correlation to international ‘competitiveness and flow of direct foreign investment. Hence, the ongoing economic reforms in the country altach a high priority to development of infrastructure. Present Status : ‘The country is criss-crosaed with road and rail lines. India possesses over 63100 Km of rail route connecting all the industrial towns and cities with the hinterlands. The length of the roads is over 3.4 million Km. It has shipping and air transport links |-with almost all the important countriés.of the world. INITIATIVES FOR INFRASTRUCTURE DEVELOPMENT General Measures : © Infrastructure sectors like power, telecommuni- calions,.roads, ports, etc. have been opened Up to private sector. Definition Of infrastructure has been widened to include telecommunications, oil exploration and industrial parks. © Cortain innovations like B.0,T. (Built, Operate & Transfer) have been brought about for enabling private sector’s participation. A specialised intermediary named Infrastructure Development and'Finance Company to extend Jong tesm finance to the infrastructure companies has been set up. © In September 1997, RBI has permitted banks to increase the credil limit for infrastructure sector projects funded by a group of companies up to ‘60 per cent of banks’ total lending. In the case of a single borrower, the prudential norm of 25 per cent of the bank's capital funds remains unchanged. Tax Incentives : © Fiscal incentives like tax holiday, and tax concessions have been given to the infrastructure seclor. ® Ten-year tax holiday for the core sector: of _ infrastructure, namely, roads, highways, water- ways, water Supply, sanitation and solid waste> management systems, which may be'avaited of during the initial twenty yeais. ( INFRASTRUCTURE } India has the largest shipping fleet among the developing countries. With the establishment of the .satellite based communication system, the Telecommunications have, improved. There are about 764 million connections (both fixed and wireless) as on November 2010. Most of the major towns and cities have been connected with Subscriber Trunk Dial facility. India has International Subscriber Dial facility with many countries. Power production has increased considerably though it is still short of demand. The total electric power generation capacity has réached the 789 billion KWH figure in 2009-10. The production of oil and gas has also increased. indigenous crude produc- tion is around 34 million tonnes a year and production of petroleum refinery products is about 150 million tonnes in 2002-10. © Inthe case of aifports, ports, inland ports, industrial parks and generation and distribution of power, Which also become commercially viable only in the long nin, a tax holiday of ten years has been allowed to be availed of during the initial fifteen years. © Tax incehtives have also been provided for the investors providing long-lerm finance or invest- ing in the equity capital of the enterprises engaged in infrastructure facility. Any income by way of interest, dividends-or long-term capital gains from such investments is fully exempt. Infrastructure Needs of the 44th Five Year Plan: ‘The-‘Report of the “Committee on Infrastructure" headed by Prime Minister projected that an amount of $497 billion or Rs.20,27,169 crores would be required for infrastructure fo sustain a growth rate of 9 per cent during the Eleventh Five Year Plan period. Out of this total investment, the share of public séctor would be 70 per cent (Rs.14,25,210 crores) and private sector around 30 per cent (Rs.6,01,959 crores). As a percentage. of GDP, the total investment in |: infrastructure would be around 7.5% (assuming annual average growth rate of 9 per cent during the plan period). Sectorally, Electricity would require 30.4 per cent of funding, Roads 15.4 per cent, Telecom 13.2 per cent, Railways 12.7 per cent,ports 3.6 per cent and airports 1.7 per cent. J il gaemeaieareeeeeraaie (_ COMMITTEE ON The Committee on Infrastructure {Col}, under the ‘Chairmanship of the Prime Minister, was constituted on 3ist August, 2004 with the objectives of - initiating policies that would ensure time-bound creation of world class infrastructure, + developing structures that maximize the role of Public-Private Partnerships (PPPs), and monitoring progress of key infrastructure projects to ensure that established targets are realized. To meet the above objectives, the Committee would + dqvelop a priority list of infrastructure projects/ programmes aimed at augmenting / modernizing On July 25, 2005, the Union Cabinet. approved ‘Viability Gap Funding Scheme’ to provide assis- tance to Public Private Partnerships (PPP) in infra- structure. The scheme is to be administered by the finance ministry and suitable budgetary provi- "| sions will be made on a year-to-year basis. Operationalisation of the schemes is expected to increase investment in critical infrastructure ‘sectors, improve productivity of investment and improve quality and service delivery. A provision of Rs.1,500 ie had been made in Budget 2005-06 for asgftance to infrastructure development. Sectors which aré expected to benefit inchide transportation, power, urban development, Infra- structure projects in special economic zones and international convention centres and other tourism projects. Eligibility Criteria ; Tey be eligible for funding under this scheme, paects will have to be developed, financed, con- structed, maintained ‘and operated for the project term by an entity with at least 51 per cent private equity. The funding would in the form of viability INFRASTRUCTURE, On January 6, 2006, the Government set up an India Infrastructure Finance Company Limited (IIFCL) for funding infrastructure. The IIFCL would be a 100 Per cent govemment-owned company. In IIFCL, at least 80 per cent of funds would be used for | financing government projects and projects implemented through public-private participation, The remaining 20 per cent could be spent on viable Private -sector projects in case there were not enough projects in the public or public-private sector. The IIFCL will be a Non-Banking Finance meetthe huge. shortfall in power generation, and ~ Capacity addition programme to achieve a target of 1,00,000 mw of power generation. The strat- egy also envisages renovation and modemisation of existing projects. NATIONAL ELECTRICITY POLICY.2005 : 1) Objectives of the Electricity Policy 2005 are a) making electricity available for all househdlds in the next five years, b) meeting power demand fully by 2012 by overcoming peaking shortages. c) supplying reliable and quality power at specified standards in an efficient manner al Institutlonal Set Up: reasonable rates, and >) d) increasing per capita availabilty of electricity to over 1000 units by 2012. 2) development of rural electrificalion distribution backbone, village electrification and household electrification to achieve the National Common Minimum Programme (NCMP) target of completing household electrification in the next five years; financial support in terms of capital subsidy to States for rural electrification; special preference to Dalit bastis, trical areas and other areas of weaker sections for rural electrification, REC to be nodal agency for rural electrification at Central Goverment level. full development of hydro potential; provision of long. term finance. for these projects. ~ cost of recovery of service from consumers at (ariff reflecting efficient costs to ensure financial viability of the ‘sector, special’ emphasis on time bound reduction of iransmission and distribution losses, o = 2 measures to promote competition aimed at consumer benefits. = teliability-and quality of power supply to be monitored by State Electricity: Regulatory Commissions. exploitation of non-conventional energy sources such as small hydro, solar, biomass and wind for additional power generation capacity. - 2 © for giving boost to renewable and non- Conventional energy sources, a prescribed percentage of power as specified by State Regulatory Commission to be purchased from Such sources of energy at the earliest. 10.necessary regulations and appointing Ombudsman ‘for redressal of consumers’ grievances Function Institution Established in National Thermal Power 1975 Corporation (NTPC), New Delhi, National Hydroelectric Power 1975 Corporation (NHPC), Faridabad, Haryana Planning, ‘promoting and organising integrated development of thermal power in’ the Central Sector execution and operation of. large pit head thermal power stations. and associated transmis- ‘sion networks, Development of hydro-electric power incor seclor in“all aspects. The torporailon is also proposing to diversify into Minl/Micro hydro projects, Wind Power and Geothermal power. Power Grid Corporation of 1989 India Limited (PGCIL) Rural Electrification Corporation (REC) 1969 Power Finance Corporation (PEC) 1986 North-Eastern Electric Power 1976 Corporation (NEEPCO), Shillong Nathpa Jhakti Power Corporation (NJPC) 1989 Shimla Tehri Hydro Development Corporation 1988 (THDC) 1948 Damodar Valley Corporation (OVC) National Power Training Institute (NPTI) - . Faridabad Central Power Research Institute (CPRI) 1960 Bangalore Establishment and operation of regional and __ ‘National power grids to facilitate transfer of power. . Itis a financial institution for rural power infrastruc- ture. Financial Institution for all senedts of power Infra- ‘structure. Hamessing ihe power potential of the north- eastern region. Joint venture of Govemment of india and Himachal Pradesh Government to execute 1500 MW Nathpa Jhakri hydro-electric power project on Sutle). ° Joint venture of Govemment of India and Uttaranchal government to execute 2400 MW Tehri hydro power complex. First multi purpose river valley development project on river Damodar. Apex training and HRD institute in Power Sector. ReSearch in Power Sector. Institutional Set Up: NTPC (National Thermal Power Corporation) : it has. successfully Commissioned’ super thermal power ‘projects at Singraull. (U.P.), Korba (M.P.), Ramagundam (AP.), Farakka (WB), Vinghyachal (MP), Rihand (ULP.), Dadri (U.P.), Khalgaon (Bihar), Talcher (Orissa) and elght gas power projects at ‘Anta (Rajasthan), Auraiya (UP), Kawas (Gujarat), Kayankulam (Kerala), Faridabad’ (Haryana), Dadri (UP.) and Gandhar (Gujarat). In addition, the Corporation has taken over 420 MW project at Unchahar (U.P.) ang 460 MW Badarpur Thermal Power Station (BTPS) in Relhi sificS 1978. NTPC hag ‘an, installed capdity to meet about 30% of the all#ttiermal capacity. It has actieved an highest PLF of 87.5 per cent against -all India averdge of 74.8 percent: It has been making profits fight from the commissioning of its first station at Singraull, NHPC (Natlonal Hydro -Power. Corporation) : ‘The Corporation has completed construction of nine hydro-electric projécts in India, including Indira Sagar Project’ in Gujarat. These power sfations { with a total installed capacity of 3,475 MW are being operated and maintained by NHPC. - The Corporation had ‘skso. constructed. Devighat Hydro-electric Project:-(14 MW)y:in Nepal. The Corporation also undertakes consultancy work in the field of--hydro-electric power and related (disciplines, NEEPCO (North Eastern Electric Power Corpo- ration) was constituted ‘in 1976 in Shillong under the Companies Act to harness the power potential of the north-eastern region through planned devel- opment of power generation projects. The Corpo- ration is responsible for operation and maintenance of the 150 MW Kopili Hycro Electric Project which was commissioned in’ June/July, 1988. The Corporation is: also operating five unils .of- gas: tuibine which are: part,of the: Assim Gas’ Based Project at Kathalguri ingAssam, ” State Electricity Boayds:. Stale Electricity Boards ard iesporisibe fof‘génera- tion and distribution of electricity in their respective states, Assam, Bihar, Haryana, Himachal Pradesh, Madhya Pradesh, Maharashtra, Meghalaya, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, West Bengal and Orissa, electricity Boards fared very badly. At present 25 States initated reforms and restructured the Boards. Reglonal Electricity Boards: They were set up in 1964 iri each-of the five regions for the devélopment of integrated operation, initially between states of the’ region with utimate aim of forming a well-knit national grid, The boards are: Northern Regional Electricity Board, Western Region Electricity Board, Eastem Regional Electricity Board and North-Eastern Reglonal Electricity Board, South- em Electricity Board. Rural Electrification: ‘The Centre would welcome people's involvement through energy Cooperatives as a method to energise villages and remote areas. The Rural Electrification Corporation (REC), set up in 1969, proposes to set up integrated energy centres in rural areas for tapping all available energy sources including the non-conventional ones, leading to faster rural electrification. The REC electrifed 5,07,451 villages and energised 126.8 lak pumpsets. It has undertaken other programmes fike electrification of tribal villages and Harijan bastis, conservation of energy used by pumpsets, and loss minimisation schemes. Damodar Valley Corporation: The Damodar Valley Corporation was established. in 1948 by an Act of Parliament for the unified devel- ‘opment of the Damodar Valley covering an area of Corporation fooks after power generation and trans- mission, tigation, flood control, navigation, conser- “| vation of soil, promotion of public health etc. The Corporation is managing the Bokaro, Durgapur and Chandrapur Thermal Stalions and the dams at Tilaiya, Panchet. and Maithon. Power Finance Corporation: The Power Finance Corporation set up in 1986 provides finance for power generation projects (hydel and thermal), transmission and. distribution’ schemes, renovation, training personnel engaged in power projects, etc. National Grid: Prior to 4th Plan transmission :systems in the About 80% of India's oil and petroleum require- ments are met through imports. in 2009-10, 131 Million Metric ‘Tonnes (MMT) of oil and petroteum products valued at Rs.2,74,438 crores were im- ported, while production of crude oil was only 33.69 MMT, As a result, India is spending @ considerable part of valuablé foreign exchange on oll and petroleum products only. . Rise in oil prices leads:to cost push inflation in the. country. Years of. severe inflation: in India (1974, 1980 and 1991).were due to rise in ‘oil prices. fibre prices-also.go up as the.caw material comes. J from petroleum products, || 242,355 sqkm in Bihar and West Bengal. The | Whenever.oll prices go up, fertiliser and polyester country were developed more or less as state systems. After 1975 construction of integrated 400 KV transmission systems was taken up by the NTPC and NHPC. The system has made considerable progress in transmission systems, and exchange of power is taking place regularly between a large number of state systems facilitating better utilisation of existing capacilies and to meet the emergency needs. Government aims to establish on integrated National Power Grid in a phased mariner by 2012. The first phase was completed in 2002, wherein regional grids were connected and inter-regional power transfer capacity of 5000 MW was established UHV. Research ‘Laboratory: An Ultra High Voltage (UHV) Research Laboratory, the first of its kind in the country was commissioned in, Hyderabad ‘on 14 August, 1993 to reduce technical. losses in transmission. It was set up by the Central Power Research Institute (CPRI). It would help in providing design data valid for the country's particular climatic, environmental and. op- erating conditions and in optimising 400 KV tine designs; The experiment facility is comprehensive and self Contained to permit studies on all important elec- trical, mechanical and biological aspects of UHV AC transmission. lines. There are proposals to introduce 765 KV.lines in the country with the super thermal and hydel stations becoming operational. Research in’ this régard would help in tho® transmission of high voltage levels in the range of 700-1200 KV (UHV range), OIL CRISIS sector has. also been de-regulated. The govern- ment announced a hew exploration licensing policy. Further, ONGC has been making investments in ‘overseas oil fields to ensure oil security through imports from. various regions, New Exploration Licensing Policy (NELP) : The Government approved the New Exploration Licensing Policy (NELP) to encourage participation ‘of private and joint venture companies in. the exploration programme .through various rounds of bidding. The new oil exploration policy provides for > 4, tax holiday for 7 years for oil exploration in North Eastern states In tune with the liberal of economy, the ii, abolition of cess in the case of new oil wells. lit. freedom to oil companies to market their pro- duce in domestic market = payment of international oil prices to ONGC and OIL (Oil India Limited) in the case of the oi! OIL EXPLORATION . The development of Exploration and Production (E&P) sector got a big boost through NELP Policy of Government of India, 1999, which brought major iiberalization in the-sector and opened it for private and foreign investment, Where 100% Foreign Direct Investment (FDI) is allowed. NELP provides a level playing field to the private operators either Indian or Foreign, by giving them the same fiscal and contract terms as applicable to, National Oil Companies (NOCs) for the offered ‘acreages. India has an estimated sedimentary aiea of 3.14 million square kilometré, comprising 26 sedimen- tary basins, out of which, 1.35 milion square Kilometre area is in deepwater. At present 1.38 million square kilometre area is held under Pe- troleum Exploration Licenses in 18 basins by national oil companies viz. Oil & Natural Gas Corporation Limited (ONGC), OIL India Limited (OIL) and Private/Joint Venture companies. .Be- fore implementing the New Exploration Licensing Policy (NELP) in 1999, 11% of Indian sedimentary basins was under exploration, which has mn increased significantly. " ‘Under NELP, so far, 68 discoveries have been made by private/joint venture (JV) companies: in 19 blocks. Under NELP, expected investment is of the order of US $ 10 Billion. Oil and Oi- Equivalent Gas (O+OEG) in place reserve ac- cretion under NELP is approximately 600 million metric tonnes, ECONOMIC LIBERALIZATION AND REGULATION OF OIL & GAS SECTOR -1. The'upstream sector allows 100% foreign direct “Investment for exploration and production in India. Exploration blocks offering through NELP and production sharing contracts are signed between Government and the operators, which provides greater fiscal stability for the operator, freedom to ‘market oll & gas. Intemational crude oil prices and free market determined prices are ‘applicable in India, The Upstream secfor Is regulated by the Government through established Acts and Rules applicable uniformly for Indian and foreign com: panies. 2. The oil sector was liberalized with dismantling of Administered Price Mechanism (APM) in April 2002. Oil marketing companies were given freedom to fix the-prices of all products except 4144 » s AND PRODUCTION ~~ v. dismantling of the administered price mecha- nism. derived from new wells, and four sensitive petroleum products. Private Sec- tor was permitted to market transportation fuels Subject to meeting certain investment criteria in Hydrocarbon Sector, In order to attract foreign direct investment (FDI) ‘and modem technology into the oil and gas sector, the Government has permitted up to 100% FDI in all segments of the sector. 4, The Public Sector Oil and Gas companies have been accorded the stalus of ‘Navratna/Miniratna’ and have been progressively granted autonomy to take decisions regarding investment, man- power planning etc. 5. The, Petroleum and Natural Gas Regulatory Board Act come into being in 2006. The Board has been constituted in 2007. The Board will fegulate activities in the downstream oll and gas sector competition among the industries and protect the interest of consumers. Other regu- lations being guided by Government Policies demonstrating Gavernment’s commitment towards meeting the growing need of energy sector and liberalized: policies to open the Oil and gas Sector are as under; a) 100% FDI Permitted in Pipelines/LNG/Mar- keting & Trading 'b) Infrastructure Status for Gas Pipeline ~ Offered in Union Budget 2007 ¢) LNG Imports, Gas Marketing under Open General License d) Progressive Decontrol of gas prices and allowing NELP Consortiums to’ sell gas on market-driven price, ©) Crude oil producers are getting. international price, f) Natural ges prices are market determined under NELP + Plan for Strategic Oil Reserves Cleared On January 7, 2004, the Union Cabinet approved | the proposal for setting up strategic oi! storage factities at 3 locations on the east and west coasts at an estimated cost of Rs.1,650 crore. Two of the strategic facilities for 5 milion tonnes of crude, sufficient for about 15 days consumption, will be |. located near Mangalore while the third will. be at Visakhapatnam, In addition to the capital cost of Rs.1,650 crore forthe setting up of storage facies, 2 Rs.5,000 crore will be needed for purchase of 5 milion tonnes of crude, This strategic storage will be in addition to the existing storage facilities for crude and petroleum products and will provide an emergency mechanism in case of short term supply disruptions. India imports around 80 per cent of its oil requirements and about 67 per cent of them come from West Asia. During 2003-04, about 28 million tonnes of crude, valued at about Rs.93,205 crore was imported, Imports / Exports of Crude Oil and Petroleum Products GROSS IMPORTS (Qty in Million tonnes; Valve : Rs. Crore) Item 2004 = 05 2008 - 10 Qty. Value ary. Value 1) Crude Oi! 95.86 117003 159.26 375378 2) Petroleum Products 8.83 14887 14.66 33753 3) LNG 25 1696 883 934 Totat 107.19 4747.02 182.75 448475 EXPORTS 1) Petroleum Products 18.21 29928 5097 144037 . NET IMPORTS 1) Crude Oil 95.86 117003 153.25 375378 2) ‘Petroleum Products (-) 9.38 (-) 15041 ¢) 36.31 () 110284 Total 88.98 103658 131,78 274438 CONTRIBUTION OF Olt SECTOR TO CENTRE / STATE RESOURCES (Rs. Crore) Item 2000 - 04 2009 - 10 - 1) Royalty from Crude oit 2,272 : 2) Royally from Gas 608 - 3) Oil Development Cess 2,731 6,559 4) Excise & Customs Duties 36.912 71,767 5) Sales Tax 23.375 64,999 6) Dividend 3.482 6,763 NATURAL GAS PRODUCTION - (Vol, Bn.Cub.Mir) Item’ 2000 - 04 2009 - 49 1) Gross Production 29.47 4754 2) Utilisation 27.860 46.69 }