Remarks by USAID India Mission Director George Deikun at the Energy Partnership Summit, New Delhi

January 22, 2007

Good morning. I am very pleased to join you today for the India Energy Partnership Program Summit on “Indo-US Cooperation toward Energy Reform.” On behalf of the U.S. Agency for International Development (USAID), I would like to welcome our partners and colleagues who have joined us today. I would like to thank Mr. R.V.Shahi, Secretary, Ministry of Power, Mr. A.K, Basu, Chairman, Central Electricity Regulatory Commission, and Mr. Barry Worthington and his colleagues from the U.S. Energy Association. Representatives of U.S. and Indian utilities and regulatory bodies are also here today, many of whom have been closely involved with the Indo-U.S. Energy Partnership Program. Thank you all for your participation.

We are here today to share some of the experiences and lessons we have learned under the current phase of the Energy Partnership Program. For more than a decade USAID has worked with the U.S. Energy Association to foster partnerships between U.S. and Indian utilities and regulatory agencies under this program. During this period close to twenty partnerships between Indian and U.S. organizations have helped to share valuable information on how to improve utility operations and performance and establish appropriate mechanisms to help better regulate the energy sector.

While there is still much to be done in the energy sector, a number of energy related institutions have already gained practical lessons from this program. In fact, BSES Ltd., now Reliance Energy, which was formerly chaired and managed by Mr. Shahi, was one of the first utilities to participate. The partnership with BSES focused on improving overall business practices and adopting internal control systems such as SCADA.

The utility partnerships under this program have shared practical experiences on operations and management systems, vital to improved performance in the energy sector. USAID is also working to improve management systems under one of our bilateral programs, the Distribution Reforms Upgrade and Management (DRUM) project. Under DRUM we are working with the Ministry of Power to improve distribution practices, increase customer satisfaction and increase commercial viability in the sector.

One of the first regulatory partnerships began in 1998 and was between the newly created Central Energy Regulatory Commission (CERC) and the U.S. Federal Energy Regulatory Commission (FERC). This partnership followed the passage of the Electricity Regulatory Commissions Bill in the same year that paved the way for independent energy regulation. The Central Electricity Regulatory Commission was established and the concept of regulation in India was introduced. Some of you may know that this partnership the U.S. regulator’s first experience in working outside of the U.S. and FERC also learned from its participation in this program.

FERC had a wealth of experience to share under this partnership. There is a rich history of innovation and the application of market mechanisms in U.S. energy regulation. There are also important lessons to be learned from some of our mistakes. This particular partnership helped to share U.S. experience in public hearings, consumer rights and tariff methodology with CERC. This and other regulatory partnerships have helped to accelerate the regulatory process in India at both the Federal and State levels. USAID is proud to have played a role to support this effort.

U.S. and Indian cooperation in the energy sector has been growing during a time when major progress has been made in many areas of our relations. In 2005 the U.S. and India launched the U.S. India Energy Dialogue to boost energy security and long-term energy cooperation. The goal of the Dialogue is to promote increased trade and investment in the sector through work with public and private partners. Partnership programs like this one are helping to further the goals of this dialogue by sharing practical experiences between U.S. and Indian regulatory and utility agencies.

Both India and the Untied States have shared interests in secure and sustainable energy supply. The shortfalls in electricity supply in India are no secret. They range from 9 % during base load times to 16 % during peak load times. According to the Planning Commission’s study on Integrated Energy Policy, India will require 760 gigawatts of electricity by 2030. This figure is roughly the same as adding one 500 MW power plant every week for the next 25 years. It represents a potential investment of over 20 billion U.S. dollars per year. This is an ambitious target and will require large amounts of investment into energy infrastructure.

Improved performance and regulation in the sector will help to make these large investments possible. Our cooperation under the Energy Dialogue and the sharing of technical and regulatory practices through programs such as this one and others are geared to improve performance and competition and promote transparent market systems so that more investments in energy can be made.

The current phase of the Energy Partnership Program began in March 2001 and there are now seven active partnerships between Indian and U.S. energy institutions. On the Indian side, organizations such as the Central Electricity Regulatory Commission, the State Electricity Regulatory Commissions of Delhi and Gujarat, National Thermal Power Corporation (NTPC) Ltd., North Delhi Power Ltd., Reliance Energy Limited and Power Trading Corporation (PTC) India Ltd. are participating. On the U.S. side regulatory agencies such as the Federal Energy Regulatory Commission, the State Regulatory Commissions of Massachusetts, Maryland, Ohio, Pennsylvania and New Jersey are involved. Utilities such as Wisconsin, Baltimore Gas and Electric, Seattle City Light, Tacoma Power, American Electric Power and PSEG Global are our partners.

Our work with the current partners and previous ones has demonstrated that such professional, peer-to-peer information exchanges can achieve powerful results and are beneficial to both Indian and U.S. partners. Indian partners have drawn from U.S. experiences and systems and applied them in India. The U.S. partners have gained exposure to India and explore potential business opportunities. Several of the partnerships in the past have resulted in commercial opportunities for U.S. companies. We hope to see more of these positive results as the program concludes in the coming year. We are also certain that the relationships we have helped to foster will outlive our initial investments into the program.

We look forward to hearing from both our Indian and U.S. partners during the summit and hope that this will be a chance for all of us to hear about relevant and practical experiences and to generate ideas for the future.

Thank you.