Arpita Mukherjee Ramneet Goswami January 2009 - icrier

A key regulatory development in the marketing sector took place in 2002, wherein
marketing of transportation fuels, such as motor sprit, high-speed diesel and aviation turbine
fuel was opened to the private sector. However, this segment continues to be dominated by
NOCs, and private players including Reliance, Essar and Shell have only 19 per cent market
share. 106
In 1997, the Administrative Pricing Mechanism (APM) was dismantled in a phased
manner. In April 2002, petroleum products imports were liberalized, and APM for all
petroleum products other than LPG and superior kerosene oil was eliminated. 107 However,
the government continued to decide the retail price of petrol and diesel.
In April 2006, the PNGRB Act, 2006 was enacted and an independent regulator in the
downstream sector was set up in October 2007. In December 2006, the government also
notified the ‘Policy for Development of Natural Gas Pipelines and City or Local Gas
Distribution Networks’ to provide a framework for the future growth of pipeline
infrastructure in the country and to promote investment from both the public and private
sectors in natural gas pipelines and city or local natural gas distribution networks. 108
3.1.3 Renewable Energy
The oil shocks of the 1970s led to an increase in crude oil prices and raised concerns
about energy security. India started to seriously focus on new and renewable sources of
energy for sustainable development and energy security. In 1981, the government established
a Commission for Additional Sources of Energy (CASE) in the Department of Science and
Technology, along the lines of the Space and Atomic Energy Commissions. In 1982, CASE
was incorporated in the newly created Department of Non-Conventional Energy Sources
(DNES), which in 1992 became a full-fledged Ministry, namely, the Ministry of Non-
Conventional Energy Sources (MNES). The name was subsequently changed to Ministry of
New and Renewable Energy (MNRE) in 2006. India is the only country in the world which
has a separate and dedicated ministry for developing and promoting non-conventional energy
sources.
Although Renewable Energy Technologies (RETs), such as biogas plants and improved
cooking stoves existed as early as the 1940s, renewable energy programs started only after
the creation of CASE. The early programs were initiated with a target-oriented supply-push
approach and were driven by direct subsidies from the government. They focused on the
development, dissemination and demonstration of various RETs. Even though this policy was
successful in creating a fairly large and diversified manufacturing base, it did not lead to
commercialization due to various reasons such as subsidies, low reliability of the devices,
lack of remunerative tariffs for RET-generated electricity, and lack of consumer-desired
features (in terms of the services and financial commitments) in the design and sales package.
With liberalization in the 1990s, there was a shift from financial to fiscal incentives and
the renewable energy programs focused on commercialization and greater involvement of the
private sector. The Ministry was restructured in 1993 into sectoral groups of (a) rural energy,
(b) urban/industrial energy, and (c) electricity generation. Through the restructuring, the
emphasis shifted towards policies, planning and institutional linkages to promote RETs
106 Ministry of Petroleum and Natural Gas (2008).
107 Oil companies can now take independent decisions based on competitive conditions to set their prices for
petroleum products. Thus, public sector oil companies have to face a competitive marketing environment.
108 Ministry of Petroleum and Natural Gas (2006).
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