The Hindu Business Line : New power policy awaits Cabinet nod

At a press conference here on Sunday, the Union Power Minister, Mr P.M. Sayeed, and the Union Power Secretary, Mr R.V. Shahi, said the draft national policy, prepared in consultation with State Governments and conforming to the National Common Minimum Programme, would be notified shortly after Cabinet approval. This policy would be followed with a new tariff policy.

The Central Electricity Regulatory Commission had issued guidelines for implementing open access in transmission in January 2004 and this led to three States announcing open access regime. However, the new policy framework, which follows the Electricity Act, 2003, would come up with a broad framework for the power sector, including private sector participation.

While the Electricity Act, 2003, has created a liberal and transparent framework for overall power sector development, several States have expressed difficulties in conforming to its provisions. To address their difficulties, 13 States have been given time ranging from four months to a year for reorganising their electricity boards. Consequently, they have time till June 2005 for separating trading of electricity from State transmission utilities.

No counter guarantees: Following the changes brought about with the new enactment, there has been heightened interest in generation of power. This can be gauged from the fact that about 4,000 MW of additional power generation capacity has achieved financial closure during the first six months.

The new regime does not have place for counter-guarantee and it is for the developers to ensure quality power and match the prices of public sector generation stations, Mr Shahi said.

On supply of fuel to some of the gas-generating stations, Mr Shahi said these independent private power developers would have to get in touch with GAIL (India) Ltd for fuel supply arrangements.

Unfortunately, some of these projects were developed much ahead of schedule and hence created problems. The issue relating to gas allocation would be sorted out.

States have to pay for free power: On the matter relating to free power announced by certain States, the Union Minister said the Electricity Act is clear about this aspect. While the States are empowered to take an appropriate decision with regard to free power issue to farmers, as was the case with Andhra Pradesh, they would have to do so on their own by meeting the financial commitment to the sector.

Mr Sayeed said power sector reforms have begun to yield results and bottlenecks in the sector are gradually being removed.

While transmission and distribution losses continue to be a major area of concern, this is gradually being addressed and the results are encouraging.

Whether there is increased investment from the private sector in the power sector or not, the expansion projects of the State and Central stations would continue.

Giving an overview of the power sector performance, Mr Sayeed said out of the targeted capacity addition of 41,000 MW during the Tenth Plan, 7,458 MW has already been commissioned, 27,112 MW is under execution and the balance is under various stages of approval.

In addition, about 3,000 MW is expected to be added through non-conventional energy sources and small hydel stations.

Further, there is the possibility of additional capacity generation of about 3,000 MW through natural gas-based projects in the Krishna-Godavari basin.