VZCZCXRO3671
PP RUEHBI RUEHCI
DE RUEHBI #1602/01 2410804
ZNR UUUUU ZZH
P R 290804Z AUG 06
FM AMCONSUL MUMBAI
TO RUEHC/SECSTATE WASHDC PRIORITY 4409
INFO RUEHNE/AMEMBASSY NEW DELHI 5634
RUCNNSG/NUCLEAR SUPPLIERS GROUP
RUEHBI/AMCONSUL MUMBAI 9190
RUEHCI/AMCONSUL CALCUTTA 1106
RUEHCG/AMCONSUL CHENNAI 1207
RUEHIL/AMEMBASSY ISLAMABAD 0640
RUEHLM/AMEMBASSY COLOMBO 0643
RUEHKA/AMEMBASSY DHAKA 0636
RUEHBJ/AMEMBASSY BEIJING 0052
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEKJCS/SECDEF WASHDC
RUEAIIA/CIA WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC

UNCLAS SECTION 01 OF 03 MUMBAI 001602 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG EFIN EINV PREL PGOV SENV SEXP EPET EMIN
ETRD, IN, CH 
SUBJECT: CEQ'S CONNAUGHTON ENCOURAGES MAHARASHTRA GOVERNMENT, 
BUSINESS LEADERS TO SUPPORT APP 
 
REF: MUMBAI 1577 
 
¶1.  (SBU) In a series of meetings on August 24 in Mumbai, CEQ 
Chairman James L. Connaughton encouraged Government of 
Maharashtra (GOM) officials and Indian business leaders to 
support the Asia-Pacific Partnership on Clean Development and 
Climate (APP).  He also briefed his interlocutors on the status 
of the proposed U.S.-India civil nuclear agreement.  (His Mumbai 
meeting with the Department of Atomic Energy is reported 
reftel.)  Connaughton's GOM interlocutors told him that high 
levels of sewage in Mumbai's water supply and air pollution in 
the state's urban hinterland were Maharashtra's most pressing 
environmental problems.  Poor infrastructure compounded the 
state's environmental problems.  Connaughton also heard that the 
state's demand for power far outstripped supply, that 31 percent 
of power is currently lost to inefficiencies and theft, and that 
demand was expected to rise rapidly over the next 5-6 years. 
Connaughton encouraged the GOM to tap the APP and venture 
capital initiatives to meet these concerns.  Industrialist Ratan 
Tata warned Connaughton that vested interests within the Indian 
nuclear establishment, led by the Atomic Energy Commission, 
could cause the civil nuclear deal to be implemented at an 
"extremely slow pace."  Tata said the USG should encourage the 
GOI to open the civil nuclear sector to public/private 
partnerships.  In his meetings with local business groups, 
Connaughton said $17 trillion would be invested in energy and 
infrastructure projects throughout the world in the next three 
decades.  He emphasized that the APP would not work without 
private sector participation and urged his interlocutors to stay 
engaged in the APP process.   End Summary. 
 
Meeting with GOM Officials 
-------------------------- 
 
¶2. (SBU) James L. Connaughton, Chairman of the White House's 
Council on Environmental Quality (CEQ), met on August 24 in 
Mumbai with Government of Maharashtra (GOM) officials, including 
Chief Secretary DK Sankaran, Secretary for Energy Bhagwan Sahai, 
and Principal Secretary for Environment Sharvari Gokhale. 
Connaughton briefed his interlocutors on the status of the 
Asia-Pacific Partnership on Clean Development and Climate (APP) 
and the planned U.S.-India civil nuclear agreement.  Connaughton 
highlighted pollution management and energy development, issues 
identified by his interlocutors as being of paramount importance 
to the GOM. 
 
¶3. (SBU) Gokhale told Connaughton that water pollution in Mumbai 
and air pollution in landlocked urban areas were the state's 
most pressing environmental problems.  Poor infrastructure 
hampered efforts to improve the situation, she said.  The GOM 
had successfully reduced the amount of industrial waste entering 
Mumbai's water supply, but the city's 18 million residents 
suffered from severe undersupply of potable water due to 
inadequate sewage treatment and disposal systems, Connaughton 
heard.  Gokhale also noted that air pollution was a major 
problem in some hinterland cities such as Pune and Solapur, 
which lacked Mumbai's coastal wind patterns.  Poor public 
transportation infrastructure, lax regulation and outdated 
technology hampered efforts to improve the situation, he said. 
 
¶4.  (SBU) Sahai told Connaughton that Maharashtra currently had 
13,000 MW of power generation capacity, far short of the 20,000 
MW of demand expected by 2012.  Maharashtra could not sustain 
its current 8 percent growth rate if generation capacity and 
distribution networks were not expanded, Connaughton was told. 
Chief Secretary Sankaran added that the state could grow far 
faster in the coming years as the state planned to develop 50 
business-friendly Special Economic Zones with high energy 
requirements.  Maharashtra already had a 12 percent power 
deficit during peak hours,  Connaughton was told.  The shortage 
would grow if supply was not expanded soon.  Compounding this 
problem, a full 31 percent of all electrical power generated in 
Maharashtra was lost to inefficiencies and theft, Sankaran said. 
 
¶5.  (SBU) Mumbai did not face the power shortages common 
elsewhere in the state because generation and distribution in 
the city had been privatized over 70 years ago, Connaughton was 
told.  Mumbai is in the process of soliciting bids for new 
 
MUMBAI 00001602  002 OF 003 
 
 
private power, outside of the context of the GOI's "ultra-mega 
power plant initiative. Despite the 4,500-5,000 MW short fall 
that exists outside of Mumbai, political realities have 
prevented replication of the city's successful privatization 
model elsewhere in the state, Sankaran explained. 
 
¶6.  (SBU) Sahai said renewable energy was not fully exploited in 
Maharashtra.  Of the estimated 7,000 MW of potential renewable 
energy, only 1,300 MW had been harnessed.  Lucrative investment 
opportunities existed in developing hydro-electric and solar 
energy projects. Connaughton encouraged the GOM to tap the large 
amount of venture capital already being spent on energy 
initiatives.  The Carlyle fund is raising a $1 billion fund for 
energy and infrastructure, while Goldman Sachs is investing $3 
billion.  The challenge for Indian investors was to attract 
venture capital to energy-related projects.  Connaughton 
explained that the APP's Buildings and Appliances Task Force 
would be an excellent resource for the Government of 
Maharashtra, as it explored solar energy and other materials and 
design, which could be integrated into buildings. 
 
Meeting with Chairman Tata 
-------------------------- 
 
¶7.  (SBU) In a separate meeting, Ratan Tata, Chairman of the 
Tata Group and Indian Chair of the U.S.-India CEO Forum, warned 
Connaughton that the Indian nuclear establishment, led by the 
Atomic Energy Commission, would likely implement the proposed 
bilateral civil nuclear agreement at an "extremely slow pace" 
because of its vested interests and its less than enthusiastic 
support for the deal. To encourage a robust implementation of 
the deal, Tata said the GOI should be encouraged to open the 
nuclear energy industry to public/private partnerships, and 
asked for USG assistance in this regard. 
 
¶8.  (SBU) Tata also encouraged the U.S. to intensify bilateral 
efforts to develop hydrogen fuel.  Responding to Tata's request, 
Connaughton said U/S of Energy David Garmon could act as India's 
liaison for hydrogen fuel development. From the U.S. 
perspective, Connaughton said, Indian hydrogen fuel initiatives 
tended to wither away in the Ministry of Non-Conventional 
Energy.  The Indian private sector would need to counteract this 
inertia if progress was to be made.  Tata also said he hoped the 
CEO Forum would focus more on advanced technologies, such as 
nanotechnologies and materials, and not on "mundane" sectors, 
where the Forum has made little progress to date.  Connaughton 
described a number of new technology initiatives under way in 
the USA of which Tata was unaware and pleased to know were 
taking place, such as cellulasic ethanol and clear diesels. 
 
Engaging Mumbai's Influential Business Associations 
--------------------------------------------- ------ 
 
¶9. (U) In meetings with the American Chamber of Commerce, the 
Indo-American Chamber of Commerce (IACC) and the Confederation 
of Indian Industry (CII) in Mumbai, Connaughton said that 
investors planned to pump US $17 trillion into energy and 
infrastructure projects around the world in the next several 
decades.  He emphasized that the APP would not work without 
private sector participation and encouraged his interlocutors to 
remain engaged in the APP process.  Connaughton asked them to 
weigh in with the GOI to remove countervailing tariffs on energy 
efficiency and environmental products and services and to 
further strengthen India's IPR regime, which was needed to 
attract first-class clean environmental technology into the 
country. 
 
¶10.  (U)  Connaughton also addressed concerns raised by several 
interlocutors regarding the Indian parliamentary debate on the 
U.S.-India civil nuclear deal.  He drew parallels between the 
reactions of the legislatures in both countries, and asked 
private industry to urge the Indian public not to overemphasize 
the outstanding differences that existed in the various drafts 
of the legislation in Congress.  It was important to focus on 
the broader framework of the deal.  Ranga Iyer, Managing 
Director of Wyeth, pointed out that the Indian Prime Minister 
had secured a major victory by roping in the support of the Left 
 
MUMBAI 00001602  003 OF 003 
 
 
party which was previously opposed to the deal.  Alok Gupta, 
Western Region AmCham Chairman and Managing Director of Cabot 
India, claimed that the opposition voiced by former leaders of 
the Indian nuclear establishment reflected a mindset.  The 
establishment feared losing the leadership role and privileges 
that it had enjoyed since the creation of the Indian nuclear 
program. 
 
¶11.  (U) CEQ Chairman James Connaughton cleared this cable. 
OWEN