India will need $120-150 billion of investment in the next five years in its energy sector to meet the rapidly expanding economy's power requirements -- expected to grow four fold in the next 25 years, a KPMG report revealed.

Highlighting that public sector spending alone would not suffice, the advisory services provider said, "It is imperative that private sector investment is strong in order to complement the public sector's and to bring in the required technologies to enhance energy resource extraction."

In its recent report 'India Energy Outlook 2007,' KPMG said energy transport infrastructure such as ports, railways, pipelines and power transmission networks needed significant funding.

India's total energy consumption for 2004-05 had been estimated at 572 million tonnes oil equivalent (Mtoe) and the per capita consumption in the country was around 531 kilograms oil equivalent (kgoe), which was 'very low,' it said.

"With a targeted growth rate of over eight per cent and an estimated energy elasticity of 0.80 per cent, the energy requirement was expected to grow at over 6.4 per cent per annum over medium to long term," the report said.

This implied a four-fold increase in India's energy requirement over the next 25 years, it added.

The study highlighted the need for tariff reforms, like phasing out subsidies or targeting them effectively, and distribution reforms to bring efficiency in the power sector.

"Steps have been taken in these directions with mixed results. Going forward, this is an important area to manage," KPMG said in the report.

The KPMG report expressed concern over distribution losses aggregating to over six billion dollars per annum, arising out of power theft, pilferage and fee non-collection.

"Power utilities in India suffer from a very high-level of network losses as much as 30-40 per cent due to theft, pilferage and non-collection of dues and also due to state network involving long-low voltage lines," it said.

The report expected private participation in nuclear energy would be allowed as the Indo-US Nuclear deal goes through.

"Looking ahead, the Atomic Energy Act is expected to be modified shortly allowing private participation and anticipating this many large Indian and International players have started discussions for possible tie-ups," KPMG infrastructure and government advisory and head energy executive director Arvind Mahajan said.

Calling for a gradual approach in bring in-market mechanisms in energy sector under an independent regulatory,

the report said it was important that the supply side position improves and more players enter the sector.

The government was also making efforts to broaden the supply base, both internally as well as externally, and intended to diversify the fuel basket by increasing shares of natural gas, hydro and even nuclear energy.

The domestic energy sector primarily comprises of coal, oil and gas.