<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><b><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>Power Sector</span></span></span></b></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• Old inefficient plants continue to operate whereas more efficient plants are underutilized.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• As the gap between the average cost of supply (ACS) and average revenue realized (ARR) persists due to high aggregate technical and commercial (AT&C) losses, distribution companies (discoms) use load shedding to minimize losses.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• Although legally independent, Regulatory Commissions are unable to fully regulate discoms and fix rational tariffs.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• Unmetered power supply to agriculture provides no incentive to farmers to use electricity efficiently.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• State power utilities are not able to invest in system improvements due to their poor financial health.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• High industrial/commercial tariff and the cross-subsidy regime have affected the competitiveness of the industrial and commercial sectors.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><b><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>Oil & gas</span></span></span></b></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• Non-discriminatory access for private and public sector companies to the gas pipeline network does not exist.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• Lack of market-driven gas prices for old fields disincentivizes further production.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• The gas pipeline infrastructure is also inadequate.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><b><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>Coal</span></span></span></b></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• Land for coal mining is becoming a major issue.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• There is a tendency to expand opencast mining and discourage underground operation even for</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>better quality coal reserves. This aggravates the land availability problem.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• There is no competitive coal market.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><b><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>Renewable energy</span></span></span></b></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• High energy costs result in reneging on old power purchase agreements (PPAs) and erode their sanctity. This leads to uncertainty regarding power offtake and consequently endangers further investments.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• Flexibility in generation and balance requirements for the integration of renewable energy are emerging as major issues.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• There are supply chain issues in biomass power generation.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><b><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>Energy efficiency</span></span></span></b></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• Limited technical capabilities, high initial capital expenditure, limited market and policy issues have adversely affected efforts to achieve energy efficiency.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• High transaction costs (which involves appointing suitable consultants and vendors for execution) relative to project size, especially in the micro, small-scale and medium enterprises (MSME) sector, makes energy efficiency investments unattractive for investors.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• The non-availability of sufficient credit facilities and difficulties in obtaining required finances for energy saving projects are strong deterrents to investments in energy efficiency in India.</span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><b><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>Overall energy</span></span></span></b></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><b><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>Subsidies and taxes</span></span></span></b></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>• A variety of subsidies and taxes distortthe energy market and promote the use ofinefficient over efficient fuels. </span></span></span></span></span></span></p>
<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”><span style=”font-size:12.0pt”><span style=”line-height:115%”><span style=”font-family:"Cambria","serif"”>They also make Indian exports and domestic production uncompetitive as energy taxes are not under GST and hence, no input credit is given. This is a serious lacuna.</span></span></span></span></span></span></p>
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<p style=”margin-bottom:13px”><span style=”font-size:11pt”><span style=”line-height:115%”><span style=”font-family:Calibri,sans-serif”> </span></span></span></p>