The Energy Regulation and Markets Review - Stikeman Elliott

India
VIIi CONCLUSIONS and OUTLOOK
Major problems that affected the Indian energy sector in the early 1990s (such as the
lack of independent regulators and the lack of transparency in tariff determination) have
now been addressed. Several facets of the energy sector in India continue to evolve in
terms of policies and incentives. Private players are being increasingly incentivised in
the electricity as well as the oil and gas markets. Further, open access to transmission
and distribution facilities, as well as common carriage in pipelines, has greatly enhanced
competition. Sudden changes in policy measures and incentives have at times dampened
investor confidence (a recent example is the reduction of the 80 per cent accelerated
depreciation allowed to wind-power generators). On the other hand, the JNNSM and the
proposed Nation Bio-energy Mission are programmes that are poised to greatly enhance
renewable energy output, and set the pace for more ambitious targets for renewable
energy. Furthermore, media reports suggest that the government has been contemplating
liberalising FDI in nuclear energy. While, realistically, that may be some time away, such
a move could be a game changer in the energy market, given that fossil fuel availability
has been predicted to become more unpredictable in times to come.
Overall, the energy sector is moving towards a regime that seeks to enable
investment, improve market efficiency and competitiveness, and enhance energy supply
to meet India’s growth requirements.
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