North East: A New Growth Engine In The Making

Access to modern infrastructure and wider energy choices are the two most critical elements for growth.

India had been working in this direction since liberalisation in 1991, but the implementation was patchy, leading to the regional disparity. 

The Narendra Modi government, however, stands apart in its focus on both sectors and mitigating regional disparity.

The northeastern region (NER) — comprising eight states spread over 8 per cent of India’s landmass — that was lagging the most on both counts, became the biggest gainer.  

While a lot is discussed on improvement in connectivity in the North East, the radical shift in the region’s energy outlook often misses the eyeballs.

From a net importer of energy products, North East is fast emerging as a major source of green energy and petroproducts for the neighbourhood. 

Parts of it are already visible in the recently inaugurated pipeline export of diesel from Numaligarh Refinery (NRL) in Assam to Bangladesh. But that’s just the beginning. 

With huge state-sector investments underway in hydroelectric, gas transmission and petrochemicals, expect North East India to be at the epicentre of an energy product value chain, sooner than later. 

Green Power  

The region did export energy in the past. Tripura became hugely power surplus in 2013 (when the 726-megawatt ONGC Tripura Power started operation).

However, such surpluses were generated by suppressing domestic demand. 

As of 2015-16 (FY16), the per-capita electricity consumption in Tripura was 329 kilowatt-hour (kWh), 30 per cent of the Indian average (1,075 kWh) with 17 per cent of households remaining unelectrified.

In the next three years, Tripura was fully electrified and the average consumption (425 kWh) was up by 29 per cent, as against 12 per cent (1,208 kWh) growth nationwide. 

Undoubtedly the gap is wide but, it is reducing. The per-capita electricity consumption in Tripura — the second most populous state in NER — is now 35 per cent of the national average. 

According to an Asian Development Bank case study, the average power supply in Assam was “8-9 hours a day”, in 2013. Assam accounts for 70 per cent of the regional population. 

Peak Electricity Deficit In Assam

CEIC data suggests the state suffered a 12-17 per cent peak deficit, with 23 per cent households outside the distribution map, when Modi came to power in 2014. 

Since then, household electrification reached 100 per cent (2019) and more investment is lined up in strengthening distribution infrastructure.

However, the peak deficit in Assam is on a systematic decline. As of 2022, the deficit was less than 4  per cent. 

According to the “Resource Adequacy Plan and Load Generation Balance Report” of the Central Electricity Authority, NER witnessed a mere 1.9 per cent peak deficit in FY22, lower than the eastern and southern regions.

The peak deficit will be replaced by a huge surplus over the next year as 2,000 MW Subansiri (Lower) hydroelectric project will be operational in phases starting mid-2023. 

Since 2016, the installed hydroelectric generation capacity of NER has increased by 60 per cent from 1,242 MW to 2,027 MW. The capacity will cross 4,000 MW in 2024, making the region a green electricity generation hub. 

North East now occupies the central position in India’s target to add 30,000 MW hydropower capacity by 2030. India has just finalised the plan to set up the country’s largest 2,880 MW Dibang multi-purpose project. 

Petroproduct 

The story is similar in petroproducts.

On paper, the region has the largest on-shore gas reserve, three refineries and produces over three million tonne of crude oil. In reality, energy crises and shortages were a common theme in NER. 

Whosoever travelled to this region would know, petrol pumps were far and few and it was common for them to go dry, throwing life in jeopardy. 

As of 2014, household coverage of cooking gas (LPG) was 53 per cent in NER, against 67 per cent nationally. Assam’s average was poorer at 49 per cent. Scrambling for LPG cylinders was a regular feature. 

Data available with the Ministry of Petroleum suggests, between FY14 and FY20, the per-capita sales of petroproducts grew by 50 per cent in Assam, double the average growth of 28 per cent in India. NER grew by 38 per cent. 

Regional LPG coverage is 121 per cent of households (Census 2011). National average is 127 per cent. Assam 133 per cent. Shortages have become a distant memory. Fuel supplies didn’t stop even during the raging floods in Assam in 2022. 

The fuel retailing network has grown by leaps and bounds. Between FY17 and FY22, the number of petroleum product retail outlets grew by 39 per cent in India and 58 per cent in NER. In states like Arunachal and Nagaland, the growth is over 100 per cent. 

Despite such robust growth in domestic consumption, North East will henceforth generate a huge surplus in petroproducts beginning end-2024 or early 2025. 

The refining capacity of the region is being doubled from 7.35 million tonne per annum (MTPA) — shared between two state-owned companies, Indian Oil and NRL — to roughly 15 MTPA. 

NER doesn’t produce as much crude oil. The gap will be filled up by imported crude, to be transported through the under-construction Paradip (Odisha)-Numaligarh (Assam) pipeline. 

NRL is expanding capacity from 3 MTPA to 9 MTPA. Cooking gas is now imported to the region. NRL is expected to produce an exportable surplus. It is now seeking government approval for adding a petrochemical capacity. 

All Encompassing 

The best and the biggest shift might come through natural gas. North East has gas but in the absence of pipeline infrastructure, it is either trapped or is used in power generation, which is wasteful. 

According to Indian Petroleum and Natural Gas Statistics 2021-22, Assam was the largest producer of onshore gas at 3,371 million metric standard cubic metre.

However, 6.1 per cent of this costly resource was flared as against 2.3 per cent nationally. 

A fool-proof project to ensure the future evacuation of gas resources and pump more gas through the national gas grid, if necessary, is underway. 

GAIL is linking the region to the national gas grid through Barauni (Bihar)-Guwahati pipeline. On the other, Indradhanush Gas Grid Ltd (IGGL) is creating a sprawling pipeline network across NER.

Both projects are witnessing fast implementation.

The Barauni-Guwhati pipeline is a tougher project as it would cross several major rivers. GAIL has recently completed micro-tunnelling under the Teesta river in West Bengal for the Barauni-Guwhati pipeline.

IGGL has achieved nearly 50 per cent physical progress in FY23. The aim is to complete 70 per cent pipeline work in FY24.

The future is clear. North East is undergoing a complete change. Impressive road and rail and air networks; improved digital connectivity and; wide energy choices will open a vista of opportunities for private sector investment. 

Once dependent on budgetary support from the central government, the region is now all set to be a growth engine. The Centre has ended the structural hurdles. It is now up to the states to make the best use of the opportunity.