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WORLD

India's energy challenge: Keeping the lights on

By Ram Ramgopal
CNN

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An electricity meter is checked at a residential building in East Delhi.

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NEW DELHI, India (CNN) -- From a bustling shop-floor near New Delhi, businessman Sanjay Leekha churns out thousands of leather accessories for export to Western markets.

Leekha knows only too well the exacting standards his products have to meet, and why he can't cut corners when it comes to quality.

What doesn't help is the erratic power supply in India.

On average, Leekha has to run his diesel generator for 16 hours a day, just to ensure he has uninterrupted power. He estimates this adds about 40 percent to his operating costs -- a figure that is soaring, along with fuel prices.

"I'm in the leather goods manufacturing industry," Leekha says. "I'm not an oil trader or whatever, yet I need to know what's happening internationally in terms of oil prices because that's finally affecting our bottom line."

Whether it's fuel for generators, transportation or even power plants, India's energy needs are growing quickly as the economy expands, on average by 8 percent a year.

India already is among the top consumers of petroleum products in the world. By 2010, it will be the fourth-largest energy user after the United States, China and Japan.

Trying to ensure India's energy security are state-owned companies such as ONGC, India's largest producer of oil and gas. ONGC drilling operations meet roughly a quarter of India's petroleum needs.

"We have less than half a percent of global reserves," says Subir Raha, chairman and managing director of ONGC. "We have 15 percent of the world's population, our average consumption of oil and gas is one-third the global average. So if you look at those three equations, we shall remain import-dependent for oil and gas.

But India, like China, is seeking to acquire energy producers in other countries to ensure a stable supply of oil and gas.

International companies are also arriving on Indian soil. As a country of more than a billion people seeks to become a superpower, even Shell is concerned about what the burgeoning energy demand could mean for the environment.

"Today, there's too close a nexus between economic growth, energy demand and environmental impact," says Vikram Mehta of Shell India. "And companies like ours recognize that there is a need to meet the energy requirements of the country but in a manner that also establishes an ecological balance within the economy, within society."

In the meantime, entrepreneur Leekha is asked if there ever will come a time when he turns on the switch, and sees uninterrupted power:

"It's something that every industrialist would look forward to. And I do hope that something like that happens in the future. But it's a tall order, I think."

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