Our Bureau

New Delhi, Feb. 3

IN a bid to move away from the cost-plus approach being used for determining tariffs in the power sector, the Government has issued guidelines for competitive bidding for tariff determination of power procured by distribution companies.

Competitive procurement of electricity by distribution licensees is expected to reduce the overall cost of procurement of power and thereby lower costs for consumers.

The Government, in its guidelines, has stipulated a long-term and a medium-term license for procurement of electricity by distribution licensees.

"The guidelines aim at moving away from cost-plus approach for determining tariff and is expected to further encourage private sector investments," the Power Secretary, Mr R.V. Shahi, said here.

The norms, formulated after consultations with Central Electricity Regulatory Commission, Central Electricity Authority and other stakeholders, would require the regulators to adopt the tariff as determined through the transparent process of bidding, Mr Shahi said.

(This article was published in the Business Line print edition dated February 4, 2005)
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