[Energy] Petrol, Diesel, LPG, Under-Recovery, Deregulation; Clean Energy, Telecommunication, NTP-2012, NFON, USOF

Support StaffEconomy24 Comments

Mrunal’s UPSC GSM3-2020 Model Answer lecture: Science Technology, Internal Security Border Management Questions from last Mains Exam Solved!
  1. Prologue
  2. [Act 1] Petroleum
    1. P1: Refineries in India
    2. P2: Survey: Oil production challenges
    3. P3: OVL assets abroad
    4. P4: Budget 2014: Diesel & LPG
    5. P5: Petrol pricing
      1. What is under-recovery?
      2. Petrol price deregulation
      3. Benefits of Deregulation?
  3. [Act 2] Clean Energy
    1. C1: Bagasse Cogeneration
    2. C2: Budget 2014: Clean energy
    3. C3: Green Energy Corridor Project
  4. [Act 3] Telecom Sector
    1. T1: Teledensity
    2. T2: New Telecom Policy 2012: Salient features
    3. T3: Mobile number portability
    4. T4: Spectrum Auction
    5. T5: Unified License
    6. T6: Survey recommendations on Spectrum
    7. T7: USOF and naxal areas
    8. T8: NFON: national optical fibre network


Economic Survey Ch11. Energy, Infrastructure and Communications. Total five subparts

  1. Energy: Coal, Shale Gas, CBM, Natural gas
  2. Petrol, Diesel, Clean Energy & Tele-Communication
  3. Roads, Industrial corridors, PPP, Infrastructure problems & reforms
  4. Shipping, aviation
  5. Railways infrastructure

Cover Economic Survey petrol under-recovery communication

[Act 1] Petroleum

  • Ranking energy consumers: China > US > Russia > India (4th largest)
  • by 2025: India will become 3rd largest consumer of energy

P1: Refineries in India

Joint Venture 2
Private 3
Public Sector 17
Total 22


List of Joint Venture refineries (2)
JV between Where?
Bharat petroleum + Oman Bina (Madhya Pradesh)
HPCL + Mittal Bathinda, Punjab


List of private sector refineries (3)
  1. Jamnagar SEZ, GJ
  2. Mothikhavdi, Jamnagar, GK
  1. Vadinar, GJ


List of Public sector refineries (17)
1 IOCL Guwahati, Assam 9 HPCL Mumbai
2 IOCL Barauni, Bihar 10 HPCL Visakhapatnam, Andhra
3 IOCL Koyali, Guj. 11 BPCL Mumbai
4 IOCL Haldia, W.Bengal 12 BPCL Kochi, Kerala
5 IOCL Mathura, UP 13 CPCL Manali, Tamilnadu
6 IOCL Digboi, Assam 14 CPCL Nagapattinam, TN
7 IOCL Panipat, Haryana 15 NRL Numaligarh, Assam
8 IOCL Bongaigaon, Assam 16 MRPL Mangalore, Karnataka
17 ONGC Tatipaka, Andhra

Demo Question: Find correct statement(s):

  1. India’s refining capacity exceeds demand.
  2. India has only 3 private sector refineries
  3. Both A and B
  4. Neither A nor B

Ans. C Both correct, as per Economic Survey 2013, ch.11

P2: Survey: Oil production challenges

  • Except KG basin and Rajasthan- all Indian oil fields are ageing, therefore declining production
  • Refineries are not upgraded, shortage of men, crude oil and capital.
  • Environmental issues, bandh/blockades aggravating the problem.
  • Solution: OVL should acquire more assets abroad.
  • Related topics: Ethanol blending program and Bharat Emission norms click me

P3: OVL assets abroad

  • OVL: ONGC Videsh ltd.
  • Has petroleum assists in from Sudan, Vietnam, Venezuela, Brazil, Columbia, Russia, Syria and South Sudan.
  • But production declined due to Geopolitical problems in S.Sudan & Syria.
  • OVL also has operations in South China Sea near the coast of Vietnam.
  • But China is objects, stating that
    • Entire area belongs to us. Brunei, the Philippines and Vietnam have no rights over it.
    • Therefore, none of them can partner with India to explore hydrocarbons in S.China sea.

P4: Budget 2014: Diesel & LPG

Diesel LPG
  • Will deregulate diesel, unless international crisis causes negative impact on crude oil supply (e.g. ISIS-Iraq, Syria, Israel-Palestine)
  • As such Government’s plan is to raise the diesel prices at 0.50 paisa per month. Thus by, December 2014 diesel will be completely “deregulated.”
  • We’ll continue providing subsidized LPGs.
  • Earlier UPA Government had changed no. of subsidized LPGs to 6, then 9 and finally 12.
  • We’ll decide a “realistic” number of subsidized cylinders for each family.


LPG subsidy mechanism
Subsidized cylinder Non-subsidized
Price 400+ 1200+
Who ? Oil Ministry decides the price
  • PSU oil companies decide the price
  • 1st of every month.
  • They use formula of Average imported cost and rupee dollar rate during last month.
  • You’ll have to buy additional cylinders @this market priceprice.
2012 6 cylinders.
2013 9. Money will be sent via DBT
2014, UPA 12 (after Rahulbaba’s demand)
2014BJP We’ll decide a “reasonable” number of subsidized cylinders.

P5: Petrol pricing

What is under-recovery?

(Before this “deregulation” thing came into picture)

  • In India, Petrol, diesel, LPG and kerosene were sold at lesser than the international oil prices. Because, Government would fix their retail prices.
  • Obviously the oil marketing companies (OMC) would make losses.
  • So, Government would compensate by giving them “oil bonds”.
  • Oil bonds promise to pay cash at later date. e.g. after 10 years with 8% interest.
  • OMCs call such amount “under-recovery”.  In reality this is not “loss” but money not available at present.

Petrol price deregulation

  • For long, Government subsidized the petrol prices.
  • But then fiscal deficit reached in danger level after subprime crisis- Because tax collection had declined. Government was unable to keep up with FRBM targets.
  • 2010: Government deregulated petrol prices based on Kirit Parikh Committee recommendations-
  • From now on, Public Sector Oil Marketing Companies (OMCs) will fix the petrol and diesel prices in consultation with the Ministry of Petroleum & Natural Gas.
  • But LPG and Kerosene were kept out of ‘deregulation’ system. And diesel prices were still kept below the market rate.
  • January 2013: Government began deregulation of diesel prices as well- increasing 50 paisa per litre every month.

Benefits of Deregulation?

  1. Government’s fuel subsidy bill will decline= fiscal deficit will reduce.
  2. Government can spend more funds on social sector schemes
  3. Less “under-recovery” for oil companies = they get immediate cash, can expand business, buy new technology, acquire oil assets abroad.
  4. companies will design more fuel efficient vehicles= less GHG
  5. Junta will use more public transport =less GHG
  6. Less nuisance of motorcycle stuntmen and eve-teasers (well, atleast in theory).

[Act 2] Clean Energy

Not going into hydroenergy, wind energy etc. because Economic Survey and budget hardly gave any points.

C1: Bagasse Cogeneration

word meaning
Bagasse fibrous matter- left over while sugarmills extract juice from the sugarcane
Cogeneration Converting Single fuel into multiple energy forms

In this process, Bagasses is converted into two energy forms

  1. Heat: used in the sugar production.
  2. Electricity: Sold to consumers.

C2: Budget 2014: Clean energy


Reduced custom duties
Item Custom duty
Solar cell Raw material: EVA sheets, flat copper wire etc. 0%
Any other plant/machine required to setup solar plant and Compressed Biogas plants (Bio – CNG) 5%
Wind mill raw material: steel rings used in ball bearing 5%
  • Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil Nadu, and Ladakh.  (500 cr)
  • Solar pump sets for farmers. (1 lakh units)
  • 1MW solar parks on Canal banks. (100 cr)
  • Green Energy Corridor Project: will hasten its implementation

C3: Green Energy Corridor Project

green Energy corridor India by 2030 renewable network

Green Energy Corridor: 2030’s projections

Who? Power Grid Corporation of India

Why? To integrate renewable energy into national power grid.

component by
  • Power Grid Corporation of India Ltd (PGCIL).
  • it operates five grids – Northern, Western, Southern, Eastern and North Eastern
Inter-state respective state electricity utility  boards

Challenges: unlike thermal power plant, the solar / wind plants

  1. cannot be run on 24/7 basis
  2. have voltage fluctuation depending on sunlight/wind strength

International funding to this project

  1. Germany promised $1 billion
  2. USA PACE (promoting energy access through clean energy)
  3. EU for offshore wind farm, Chennai

[Act 3] Telecom Sector

T1: Teledensity

Teledensity  = % of telephone connection per 100 persons living in the given area.

Teledensity in India (%)
Rural 44.01
Urban 145.46
Overall 75.23
  • India: 2nd largest telephone network in the world (after China)
  • As such, Tele density is not a good indicator of economy. For example:
  • Tax havens like Cayman island= thousands of post-box companies = teledensity will look higher. Same for tourism based economies- because hotels will have more connections than the actual residents.
  • Even Soviet Union had high teledensity but their per capita national income (PPP-wise) was low.

T2: New Telecom Policy 2012: Salient features


  1. All India Full Mobile Number Portability, One Nation – Free Roaming
  2. Increase rural teledensity: 70 (2017); 100 (2020).
  3. Make mobile phone an “instrument of social and financial empowerment”
  4. make India a global hub for manufacturing telecom instruments


  1. Right to broadband for all – with minimum 2Mbps download speed
  2. Facilitate VoIP, cloud computing, IPv6 and next generation networks


  1. allot spectrum in transparent manner, using market determined process (i.e. auction, resale etc)
  2. Periodic audit of spectrum utilisation to ensure its efficient use.
  3. Increase spectrum availability every 5 years.
  4. Unified licenses. Delink Spectrum from license.
  5. Simplify the Merger & Acquisition regime in telecom service sector.

T3: Mobile number portability

  • It is the facility to switch mobile service provide company without having to change your mobile number.
  • Until now, mobile number portability was permitted within given telecom circle only. (there are 22 circles in India)
  • New telecom policy (NTP-2012) wanted All India mobile number portability. But deadline missed- next target by 2015.
  • BizGK: MNP is implemented by two companies Syniverse Technologies and MNP Interconnection Telecom (they manage the forms and coordinate between the two mobile service providers when you apply for MNP).

T4: Spectrum Auction

2012: Government designed new telecom policy (NTP) – for allocating spectrum in transparent manner.

spectrum chart

Specturm (Mhz) 2013 auction 2014, Feb auction
800 bought not listed (Because already sold in 2013)
900 companies showed no interest companies bought both 900 and 1800.Government earned >61,000 crores.
2300 Not auctioned. Mukesh Ambani’s Reliance Jio already owns it. Higher the Mhz=faster dataspeed. 2300 ideal for 4G.

SMRA: Simultaneous Multiple Rounds Ascending (SMRA). This is the “e-auction” method used by government for auctioning spectrum.

T5: Unified License

  • NTP-2012 envisages “One nation One License” system.
  • Department of Telecom has designed unified licence guidelines accordingly.
  • Now, the Spectrum allocation is delinked from the licence
  1. Company will have to apply for license.
    • Only one unified license is required for all telecom services in entire India- for all 22 circles.
    • Although, company will need to get separate permissions for ISD calls, internet service provider [ISP] services etc.
  2. After getting the license, the Company will have to buy the spectrum separately.

T6: Survey recommendations on Spectrum

  • Permit smoother trading and sharing of spectrum.  (2G case = companies bought sprecum but did not use them. They instead sold it to other companies at higher price- similar to cinema ticket black-marketing)
  • Revamp policy for better spectrum Management.
  • reduce the spectrum cost

T7: USOF and naxal areas

  • USOF = Universal service obligation fund
  • Under Dept. of Telecom
  • To improve phone and internet connectivity in rural areas
  • Non lapsable fund.
  • Gets money from two sources
    • 5% revenue from all telecom providers
    • Centrally sponsored schemes for rural infra / BRGF/ LWE areas
  • officially there are nine states affected with LWE (left wing extremism) viz. : Andhra, Bihar, Chhattisgarh, Jharkhand, Maharashtra, Madhya Pradesh, Odisha, UP and WB
  • BSNL is setting up mobile and internet facilities there, using USOF funding.

T8: NFON: national optical fibre network

  • To provide broadband connection to all 2.5 lakh Gram Panchayats of India.
  • as per latest TRAI guideline, broadband means internet speed of 512 Kbps
  • Bharat Broadband Network Ltd (BBNL) (under BSNL)
  • 50,000 Gram Panchayat by March 2015
  • 1 lakh by March 2016
  • remaining by March 2017
Money? from USOF-Universal service obligation fund
Benefit? will help extracting maximum potential of other e-governance projects, online monitoring of SSA, MNREGA, e-health, e-banking, e-education (CLICK initiative) etc.

PS: “Communication” also involves postal department. But Survey and budget hardly said anything about it, hence not dwelling. But for Postal-GK part, you may refer to

  1. Last year’s summary click me.
  2. PIN-2014, list of new stamps released click me
Indian History Freedom Struggle Pratik Nayak

24 Comments on “[Energy] Petrol, Diesel, LPG, Under-Recovery, Deregulation; Clean Energy, Telecommunication, NTP-2012, NFON, USOF”

  1. Chapter: 11 = 11 Days remaining for Katl ki Subah
    So, Chapters are going as per reverse countdown till Katl ki Raat…
    Anyway, Thanks a lot……:)

      1. Sir plz provide some objective questions related to science and economy….last time you gave it in polity and science, plz sir it will boost our confidence

  2. Sir its great to see your passion…day after day you keep adding on your work while each one is a masterpiece. .. you always impress and motivate us… god bless you. .☺

  3. Sir in GEC, it’s mentioned intra-state would be handled by PGCIL and interstate by SEBs. Shouldn’t it be the other way round?? Or i’m comprehending wrongly.

  4. Hi Mrunal,
    Good work, thanks.
    one correction i noticed :- Under clean energy – the authority that controls the components has been swapped (inter – state, intra PTC) believe it should be inter – PTC and intra State.


  5. Last month, I covered some parts from Economic Survey and may be important as they were in news (though I don’t reckon where and when !!) I am sharing those topics here. Any inputs will be solicited.
    CBM is a form of natural gas extracted from coal beds. The term refers to methane adsorbed into the solid matrix of the coal. It is called ‘sweet gas’ because of its lack of hydrogen sulphide. The presence of this gas is well known from its occurrence in underground coal mining, where it presents a serious safety risk.
    India has the fourth largest proven coal reserves in the world and holds significant prospects for exploration and exploitation of CBM Under the CBM policy, 33 exploration blocks have been awarded in Andhra Pradesh, Assam, Chhattisgarh, Gujarat, Jharkhand, Madhya Pradesh, Maharashtra, Orissa, Rajasthan, Tamil Nadu, and West Bengal.
    Total CBM reserves : 26000 km2
    CBM exploration :17000 km2
    Estimated CBM reserves : 92 TCF
    Established CBM resrves : 9.9 TCF
    In Dec 2013, the government decided to give CIL licence to produce natural gas from CBM from its existing mines.
    The government started the Ethanol Blended Petrol (EBP)Programme in 2003. In 2006 it was extended to the entire country, except the north-eastern states, Jammu and Kashmir, Andaman and Nicobar Islands, and Lakshadweep.
    To boost the EBP Programme, the government decided on November 2012 that 5% mandatory ethanol blending with petrol should be implemented across the country. Procurement price of ethanol was henceforth to be decided between OMCs and suppliers of ethanol. The OMCs are implementing the Programme in the notif ied 20 states and 4 UTs as per the availability of ethanol.

  6. Sir I think in green energy corridor topic inter state is by pgcil and intra state level is by electricity utility boards. isn’t swap mistake there? convey me if I am wrong.

  7. Mrunal Sir, bumped onto ur articles accidentally 3 months back and have been an ardent follower since then, i hope i could have known about you before, but its better late than never….
    Thanks a lot for your efforts which is very much evident from the simplistic ways you present the tough portions of the syllabus…..
    Gud luck…

  8. guys … “english marks not to be counted in csat grading” does this statement by hon.minister still applicable ??? will there be questions on english comprehension (those with no translation) or not ??? a bit confused… can someone clear my doubt ??? thanks

  9. Dear Mrunal ji,

    Thanks for this gr8 article.

    Please update on change in prelim marking scheme for this yr if those 10 questions on English will be counted on not ???

    waiting for ur response.

  10. Sir kindly have a re-look on inter state and intra state power..seems got reversed due to typo..

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