Working Paper No. 231 Trade in Energy Services: GATS and India Arpita Mukherjee Ramneet Goswami January 2009 INDIAN COUNCIL FOR RESEARCH ON INTERNATIONAL ii ECONOMIC RELATIONS Contents Foreword....................................................................................................................................i Abstract.....................................................................................................................................ii Abbreviations ..........................................................................................................................iv Units .........................................................................................................................................vi Introduction..............................................................................................................................1 1. Classification and Coverage of Energy Services..............................................................1 2. Global Overview..................................................................................................................4 2.1 Market Structure and Liberalization ......................................................................................... 11 2.1.1 Coal ..................................................................................................................................... 13 2.1.2 Oil....................................................................................................................................... 14 2.1.3 Natural Gas........................................................................................................................ 14 2.1.4 Renewable Energy.............................................................................................................. 16 2.1.5 Nuclear Energy .................................................................................................................. 16 2.1.6 Electricity ........................................................................................................................... 16 2.2 Trade in Energy Services........................................................................................................... 18 2.3 Trade Barriers ........................................................................................................................... 20 2.3.1 Market Access Barriers...................................................................................................... 20 2.3.2 Discriminatory or National Treatment related Barriers.................................................... 21 2.3.3 Regulatory Barriers............................................................................................................ 22 2.3.4 Other Barriers.................................................................................................................... 22 3. Overview of Indian Energy Sector ..................................................................................23 3.1 Market Structure and Liberalization ......................................................................................... 27 3.1.1 Coal .................................................................................................................................... 28 3.1.2 Oil and Gas ........................................................................................................................ 29 3.1.3 Renewable Energy.............................................................................................................. 31 3.1.4 Nuclear Energy .................................................................................................................. 32 3.1.5 Electricity ........................................................................................................................... 33 3.2 FDI in the Energy Sector........................................................................................................... 34 3.3 Trade in Energy Services........................................................................................................... 38 3.3.1 Coal .................................................................................................................................... 38 3.3.2 Oil and Gas ........................................................................................................................ 39 3.3.3 Renewable Energy.............................................................................................................. 41 3.3.4 Nuclear Energy .................................................................................................................. 43 3.3.5 Electricity ........................................................................................................................... 45 3.4 Trade Barriers ........................................................................................................................... 45 3.4.1 Domestic Barriers .............................................................................................................. 45 3.4.2 External Barriers................................................................................................................ 50 4. General Agreement on Trade in Services - GATS.........................................................52 4.1 Uruguay Round of Negotiations ................................................................................................ 52 4.1 Doha Round of Negotiations ..................................................................................................... 54 4.3 India’s Negotiating Strategy...................................................................................................... 60 5. Reforms..............................................................................................................................63 5.1 Coal ........................................................................................................................................... 67 5.2 Oil and Gas................................................................................................................................68 5.3 Renewable Energy ..................................................................................................................... 68 5.4 Nuclear Energy.......................................................................................................................... 70 5.5 Electricity...................................................................................................................................71 Conclusion ..............................................................................................................................72 Bibliography ...........................................................................................................................74 Appendix A.............................................................................................................................81 Appendix B .............................................................................................................................83 Appendix C.............................................................................................................................85 Appendix D.............................................................................................................................89 Appendix E .............................................................................................................................92 Appendix F .............................................................................................................................93 List of Tables Table 2.1: World Leading Primary Energy Consuming Countries in 2007 ..............................4 Table 2.2: World Energy Consumption (2005-2030)................................................................5 Table 2.3: Countries with Largest Coal Reserves in 2007.........................................................5 Table 2.4: Five Largest Coal Producing Countries in 2007.......................................................6 Table 2.5: Five Largest Coal Consuming Countries in 2007.....................................................6 Table 2.6: Countries with Largest Oil Reserves in 2007...........................................................6 Table 2.7: Five Largest Oil Producing Countries in 2007.........................................................7 Table 2.8: Five Largest Oil Consuming Countries in 2007.......................................................7 Table 2.9: Countries with Largest Natural Gas Reserves in 2007.............................................7 Table 2.10: Five Largest Natural Gas Producing Countries in 2007.........................................8 Table 2.11: Five Largest Natural Gas Consuming Countries in 2007.......................................8 Table 2.12: Five Largest Hydroelectricity Consuming Countries in 2007................................9 Table 2.13: Five Largest Installed Wind Power Capacities in 2007..........................................9 Table 2.14: Five Largest Nuclear Electricity Generating Countries in 2007 ..........................10 Table 2.15: Five Largest Nuclear Energy Consuming Countries in 2007...............................10 Table 2.16: Five Largest Electricity Generating Countries in 2007 ........................................10 Table 2.17: Five Largest Electricity