Prime Minister Manmohan Singh, power minister Sushil Kumar Shinde and Kirit Parikh (centre), member, Planning Commission, in New Delhi on Wednesday. (PTI)

New Delhi, July 26: Prime Minister Manmohan Singh today said there was a need to examine the relevance of the entire gamut of taxes and subsidies in the energy sector.

?The extreme volatility that we have seen in international oil markets, coupled with similar magnitudes of price increases in natural gas and imported coal, has put an enormous pressure on the domestic prices,? Singh said addressing the energy conclave on implementing the integrated energy policy.

?We need to factor in the economic cost and the environmental cost of alternative sources of energy while setting their prices. Only then will we be able to ensure that the energy security we desire gets translated into reality,? he added.

India is short on modern energy resources such as oil, gas and uranium and even coal is not as abundant as is generally believed. ?Thus we must use our energy resources optimally and efficiently,? Singh said.

Pricing policies play an important role in consumers? selection of energy sources, he said, adding, ?We must examine the relevance of the entire gamut of taxes and subsidies on various energy forms and energy using devices.?

Singh also expressed concern over the mounting losses in the power sector and called for a new management strategy to deal with the situation in the energy sector.

?There are transmission and distribution losses as high as 40-50 per cent in several parts of the country and the new management system will have to deal with this harsh reality,? he said.

Regarding energy requirement in India in the next 25 years, the Prime Minister said the power sector alone would need Rs 600,000 crore and such scale of investment would come only when there are proper returns.

The integrated energy policy has estimated energy requirements in the year 2030 to be higher than the existing level by a factor between 4 and 5, if the Indian economy grows at around 8 per cent annually, the Prime Minister said.

?The figures for future requirements are gigantic. Electricity generation capacity would need to go up from our current installed capacity of 131,000 mw to 800,000-950,000 mw. This would imply huge annual imports of oil ? anywhere between 300 to 400 million tonnes and coal imports that could touch 800 million tonnes annually,? Singh said.

?How can we ensure that such vast quantities of energy are available? What would be the investment and foreign exchange requirements? India urgently needs to define a new paradigm of development for its energy sector,? he said.

And this paradigm will have to focus on both the demand and the supply sides.