MINISTRY OF POWER

Economic Editor’s Conference 2000

POWER SECTOR – ISSUES AND STRATEGIES

INTRODUCTION

 

Electricity is a concurrent subject at Entry 38 in the List III of Seventh Schedule

of the Constitution of India. The implementation of power related schemes involves both the Central and State Governments. The policy guidelines and the statutory and organisational framework have been provided by the Central Government through the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948. The State Governments are primarily responsible for the generation, transmission and distribution of the power to ultimate consumers. Since the State Governments were facing resource constraints, generation in the Central Sector has been encouraged by setting up Central Generating Stations through NTPC, NHPC and NEEPCO. To evolve a National Grid to faciliatate transfer from surplus area(s) to deficit areas from time to time, the Central Government has also set up the Power Grid Corporation of India Ltd.  Changes have been introduced in the Power Policy and Central Acts in the recent years  with the objective of encouraging Private Sector investments in generation, transmission and distribution in the Power Sector as resource available with the Government PSUs and SEBs are not adequate to meet the current projected demand of a rapidly growing economy.

 

                The Indian Power Sector has made giant strides in the past fifty years by increasing its installed capacity from  1,300 MWs at the time of independence to about 99560 MWs as on 30^th  September 2000. The size and expansion of the transmission and distribution network has also increased substantially. Besides all urban centres, upto the end of July, 2000 about 86.35% of the total villages of the country have access to electricity. There has also been progressive inter-connection of power systems at the State level to start with and then at the regional level. The entry of Central Public Sector Undertakings into power generation and transmission have helped further consolidation of the power system in the country. A National Power Grid, which has been approved in principle by the Government is already on the horizon. The growth achieved almost entirely through investments in the public sector have indeed been impressive. Energy shortages increased but peak shortages have slightly reduced in 1999-2000 as compared to 1998-99. However the gap still remains to be filled. What is more serious now is that the high growth achieved in the past may perhaps not be sustainable through public funding alone in the future. The capacity of the States to set up additional generation facilities has been deteriorating due to growing financial constraints. It is worth mentioning that during the Fifth Plan (1974-79), the capacity addition was 10202 MW, during the Sixth Plan (1980-85) it was 14226 MW and for the Seventh Plan (1985-90) it was 21401 MW.  However, in the Eighth Plan it has been only 16423 MW. For the Ninth Plan, the likely addition according to the mid-term review is going to be of the order of approximately 28,097 MWs. The major shortfall would be in the area of private sector projects and only about 45% of their targets would be achieved by the end of the Plan. The performance of the Central and the State Sectors would be better since they would achieve approximately 60% and 90% of their targets, respectively, as against 63% and 46% during the Eighth Plan. 

 

CAPACITY ADDITION

The target for capacity addition for the Ninth Plan was 40,245 MW. This included

11909 MW in the Central Sector, 10,747.7 MW in the State Sector and 17,588.5 MW in the Private Sector. In the Mid Term Appraisal which was conducted in July, 1999, it was realised that only about 28,097 MW is likely to come up during the 9^th Plan period. The corresponding breakup in terms of hydro/thermal and nuclear and also in terms of Central/State and Private Sector, would be as follows:-

                                                                                                                   (IN MW)------------------------------------------------------------------------------------------------------------

                                      Hydro              Thermal          Nuclear           Total

            Central             2955.0             5894.0             880.0               9729.0

            State                5128.2             4877.0               --                 10005.2

            Private                316.0             8047.0               --                   8363.0

            Total                8399.2           18818.0             880.0             28097.2

 

            During the Ninth Plan period, 12,001 MW have been achieved so far,  break-up of which is as follows:-

                                                                                                           

                                                                                                                            (IN MW)------------------------------------------------------------------------------------------------------------

                                    Central            State               Private            Total

             1997-98             333.00           1676.00           1217.50           3226.50

            1998-99             991.60           1675.40           1575.00           4242.00

            1999-00           1615.40           2329.10             588.00           4532.50

            Total               2940.00           5680.50           3380.50         12001.00

 

            For the year 2000-01, the target set for capacity addition is 4000.30 MW which includes 1297.00 MW of hydro, 2263.30 MW of Thermal and 440.00 MW of Nuclear. Till the end of August, 2000, 1422.25 MW have already been achieved which include 746.25 MW of hydro, 676 MW of thermal capacity.

 

IMPORTANT INITIATIVES TAKEN BY MINISTRY OF POWER

 

The Government has taken various measures to mitigate the shortage of electricity in the country to accelerate the process of reforms. Some of the important measures taken by the Government are as follows:

 

·        The Electricity Regulatory Commissions Act, 1998 promulgated. 

 

·        CERC (Central Electricity Regulatory Commission) has been constituted and is operational since July, 1998.

·        The Indian Electricity Grid Code has been finalised.

·        The Central Government has omitted the provisions of Section 43 (A)(2) of the Electricity (Supply) Act, 1948, thereby transferring the tariff fixation powers to the CERC.

·        Electricity Laws (Amendment) Act, 1998 enacted giving transmission activity an independent status to encourage more investment and the guidelines issued for private sector participation.

·        Measures have been undertaken to facilitate further reforms in power sector such as relaxation in PFC funding conditionalities, Accelerated Power Development Programme (APDP) funding for R&M and Distribution network, REC funding for 100% electrification for villages and hamlets.

 

Draft Electricity Bill, 2000

 In order to encourage private sector participation in generation, transmission and distribution and the objective of distancing the regulatory responsibilities from the Government to the Regulatory Commission, the need for harmonising and rationalising the provisions in the Indian (Electricity) Act, 1910, Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998 arose.  Accordingly, it became necessary to enact a new legislation for regulating the electricity supply industry in the country which would replace the existing laws, preserve its core features other than those relating to the mandatory existence of the State Electricity Boards.

 Need was also felt to provide newer concepts like power trading, spot electricity markets and open access.  There is also need to obviate the requirement of each State Government to pass its own Reform Act.  The  National Council of Applied Economic Research (NCAER) was asked to suggest legislative changes which would accelerate the reform process.  The draft given by the NCAER was circulated for comments to all States, their Electricity Boards, the Central and State Regulatory Commissions, the CII, FICCI, ASSOCHAM, IPPs Association, Political Parties, Members of the Standing Committee on Energy, Experts, FIs, private licensees and others.  The draft submitted initially by the NCAER has undergone changes and refinement after taking into account the various comments and views received.  Based upon the discussions and consultations held, the Ministry of Power which has been contemplating a legislation in this regard gearing up to introduce the Bill in the coming winter session of Parliament..

 

MOU with States:

 

The Ministry of Power has signed MOUs with the States of Karnataka, UP and Madhya Pradesh charting out the programmes for power sector reforms in these States.

 The SEBs of Orissa, Haryana, Andhra Pradesh, Karnataka, UP and Rajasthan have been unbundled/corporatised.  The Government of Delhi has commissioned a study on corporatisation of electricity distribution and generation. The reforms process in Orissa has further progressed with privatisation of distribution in the State.  The four subsidiary companies of GRIDCO have been disinvested in favour of the private companies.  The Power Generation Corporation (OPGC) has also been disinvested to the extent of 49%.

 Fourteen States (Orissa, Haryana, Andhra Pradesh, UP, Karnataka, West Bengal, Tamil Nadu, Punjab, Delhi, Gujarat, Madhya Pradesh, Arunachal Pradesh, Maharashtra and Rajasthan) have either constituted or notified the constitution of SERC.  Tariff orders have been issued by the SERCs of Orissa, Andhra Pradesh, Maharashtra and UP.  Tariff petions have been filed in Gujarat and Haryana and the Commissions are likely to issue tariff orders in near future.  Very recently, the State of Assam has also set up its SERC and gearing up to give a push to the process of reforms.

Power on Demand by year 2012

 To meet the capacity requirement by the year 2012, Central Sector is likely to contribute 40,000 MW. State Sector 30,000 MW and the balance is to be supplemented by  private power producers.

·        Captive power generation is being encouraged and requirement of TEC approval of CEA up to investment of Rs.3000 Crores has been done away with.

·        A new Hydel Policy has been formulated with the objective of enhancing hydro capacity addition through exploitation of unharnessed potential, promoting small and mini hydel projects and strengthening the role of PSUs/SEBs taking up new projects and also increasing private sector participation.

·        A Power Trading Corporation has been set up to buy power from Mega projects for beneficiary States under long term PPAs  A provision has been made for Bulk Power Supply arrangements with the consumers.

 

Securitisation

 Over the years, SEBs have been defaulting in their payments to the CPSUs of the Ministry of Power.  To recover these outstanding dues, Government of  India has resorted to appropriation from the Central Plan assistance of the concerned States.  Between May 1990 and March, 1994, three such recoveries were made from the CPA of the defaulting States.  In February1997, the Government again approved recoveries of the outstanding dues of CPSUs as on 31.12.1996.  However, this time, the recovery from CPA was restricted to 15% and out standings of Ministry of Power, Department of Coal, Atomic Energy, Railways and BHEL were included.  However, dues have continued to mount and as on 31.7.2000, they are nearly Rs.26,000 Crore.

 The Finance Minister in his Budget Speech for 1998-99 announced that the Government would evolved a scheme for securitising the debts of CPSUs of Ministry of Power and Department of Coal so that funds would be made available for meeting the investment needs of these sectors.  In June, 2000, Government approved a scheme for securitisation of SEBs dues.  The salient features of the schemes are as under:

 (a)    The concerned defaulting SEBs would issued bonds to the CPSUs of Ministry of Power and the Department of Coal to recover the principal amount due upto 31.12.1999 or any other mutually accepted date. 

(b)   The bonds would be backed by a State Government guarantee with specific allocations to be made in the concerned State Governments budget for servicing the bond in the event of the SEBs being unable to do so.

(c)    By way of further comfort to the bond holder, the Central Government would undertake to use the existing authorisation to deduct upto 15% CPA allocations of the State concerned for the purpose of redemption of bonds if the State Government is unable to meet the guarantee obligation.

(d)   The bonds will have tax-free status.

(e)    With the above features, the bonds were expected to be tradable in the seconday market and the Central PSUs would have option to recover their money by selling the bonds in the secondary market.

(f)     The above facility of issue of guaranteed tax-free bonds by the SEBs would be available only to those SEBs/State Governments who agree to implement a suitable reform package including payment of current dues by the SEBs and opening of LC to the extent of 105% of the current dues, adhering to milestones of reforms formulated by the Ministry of Power and setting up of the SERC quickly in the concerned States etc.

 

Efforts are on to operationalise the scheme for which consultations with the State Governments and concerned Ministries are on.         

 

POWER MINISTERS’ CONFERENCE

 A Conference of the Power Ministers’ of States was held on 26.02.2000 at New Delhi.  The Power Ministers’ Conference took note of the impending difficult situation facing the power supply industry in the country due to continuing decline in commercial viability of the sector as a whole.  It noted that:

 1.      Outstanding dues of CPSUs have been increasing and have now reached Rs.23,000 crores.  This trend, if maintained, would adversely affect their current operations apart from inhibiting their future expansion plans.

2.      Financial closure for private power projects is becoming increasingly difficult.

3.      The states are unable to finance new projects on their own.

4.      Increases in budgetary support from State Governments as well as Central Government for this sector is not feasible due to fiscal deficits.

 

II          The primary factors responsible for this unsustainable financial situation are:

 

i)                    that, theft and pilferage at the macro level are estimated to be over Rs. 20,000 crores per annum

ii)                   that, technical losses in transmission & distribution for the country are also too high.

iii)                 that, a large number of thermal stations in the state sector run at an operational efficiency of less than 40%.

iv)                 that, the average annual operational losses of the State Power Sector is over Rs.12,000 crores.

 III        It was also recognised that the cross subsidies cannot be sustained if industrial tariffs make Industry non-competitive in the new environment of increasing globalisation with elimination of quantitative and other restrictions. It becomes necessary to ensure that Indian Industry is not handicapped by unsatisfactory power supply or by tariff which makes it non-competitive. Further, the consumer, including the farmer has a legitimate claim for uninterrupted good quality power supply. His willingness to pay reasonable costs is often underestimated.

 

RESOLUTIONS

 1.                  The Power Ministers resolved after taking into account all the problems facing the power sector, that with the intention of achieving commercial viability; and providing power at reasonable rate to all, reforms must be undertaken with determination, vigour and a sense of urgency. Delay in reforms only increases the financial cost of reforms, and the burden of liabilities increases. Reforms must begin to show results within the next 2-3 years. The key elements of the reform strategy are:

 

(a)                Energy Audit at all levels.

(b)               Time-bound programme of 100% metering of all consumers by December, 2001.

(c)                Reduction and finally, elimination of power theft within a specified time frame.

(d)               Strengthening/upgradation of sub-transmission and distribution system by taking sub-station as a unit on a priority basis.

 

2.                  If the above appears unattainable in the existing set up, corporatisation/ cooperatisation/ privatisation of distribution, would have to be undertaken.

 3.                  Since a large number of thermal stations within the State sector are running at a PLF below 40%, immediate Renovation & Modernisation (R&M) including Life Extension (LE) would need to be undertaken for old hydel power plants on priority.

 4.                  Effective functioning of State Electricity Regulatory Commissions is essential for rationalisation of tariff, and balancing the interests of the consumer and the need for commercial viability of the utilities in the environment where private sector participation in the industry is expected to gradually increase.

 5.                  Unbundling and  corporatisation of State Electricity Boards/bench-marking through separate distribution profit centres/ corporations/ companies may facilitate the Regulatory Commissions in promoting competition within the power supply industry – competition being the key to lower prices.

 6.                  It was noted that the power system network in country has an unmatched reach to the consumers and with the installation of optic fibre cables along the existing power lines using its right of way, it has the potential of generating very large resources in the coming years by providing facilities for multipurpose communication including cable TV, IT services, Telecom services, etc. Hence, efforts need to be made to creatively tap this potential source of large revenue from convergence.

 7.                  In order to promote reforms, a new draft central legislation which obviates the need for separate enactments for the States, is being considred. The draft Bill submitted by the NCAER would form the basis for a national debate and a consensus on the contents of the new Bill. The States would be sending their detailed comments on this draft Bill, to the Ministry of Power at the earliest.

  

Strengthening of National Grid & Diversification of Powergrid into Telecom Business

     POWERGRID has chalked out its plan to integrate all the Regions through HVDC stations/bi-poles and 765 KV AC rings to facilitate transfer of power between the regions without any constraints. HVDC Regional link between Western & Northern, Western & Southern and Eastern & Southern regions  already exist and HVDC links between Eastern  & Northern region is under construction. For further strengthening of National Grid, high capacity long HVDC/AC links viz Talcher-Kolar, Ib-Jaipur and Tala transmission system have been planned.

             Under its ambitious plan to diversity into telecom business, POWERGID propose to lay additional 10,000 Kms of Optical Fibre with an investment of Rs.1000 crores on high voltage transmission lines to provide national long distance telecommunication network. Hon’ble Prime Minister inaugurated Delhi-Chandigarh Optical Fibre Network on EHV transmission lines under Northern Region Unified Load Despatch & Communication System of POWERGRID on 2^nd August, 2000.

  

PRIVATE PARTICIPATION IN THE POWER SECTOR

      The response to the Government of India's (GOI’s) energy policy has been encouraging. Since 1991, both domestic and foreign developers have evinced keen interest in the Indian power sector.  Altogether, 95 private power projects amounting to 54,967 MW of installed generation capacity are presently being monitored by the Central Government.  In addition, there are several projects  which are being set up by the private sector with the approval of the State Governments themselves and do not require the techno-economic clearance of Central Electricity Authority(CEA). 57 projects having a capacity of of 29,375 MW have been given techno-economic clearance.  So far, 24 projects of capacity 5065.95 MW (including those also which do not require TEC of CEA) have been commissioned and 19 projects of 5296 MW (including those which do not require TEC  of CEA)  are in various stages of construction. 

 

Major Recent Policy Initiatives

 

Setting up of Mega Power Projects/ Power Trading Corporation: Large capacity projects offer distinct advantages in terms of management cost, operational costs etc.  and help greatly in  capacity addition. However, considering the limited requirements of individual States and also factors such as fuel availability etc., a need for promoting power projects with large installed capacity, feeding power to more than one State grid was felt.  To facilitate this, Government has announced its revised mega power project policy in November 1998. Certain projects, both in the public as well as private sector have been identified as mega power projects.

 

Private Participation in Transmission: After the recent amendment in Electricity Laws, transmission activity has been given an independent status and the concept of Central and State transmission utilities has been introduced.  While POWERGRID has been notified as the Central Transmission Utility (CTU), the State Electricity Boards or their successor State transmission companies would be the State transmission utilities (STU).  It is mandated in the Act that CTU and STU would be Government companies. The guidelines for private participation in transmission through Independent Private  Transmission Company (IPTC) or Joint Venture Partner (JVP) have been issued very recently.

 

Setting up of Crisis Resolution Group: A Crisis Resolution Group (CRG) in the Ministry of Power was set up on January 1, 1999 under the chairmanship of the Union Minister of Power, with members consisting of Secretaries in the Prime Minister’s Office, Ministries of Power, Finance, Coal, Environment & Forests and the Chairman of Railway Board, Central Electricity Authority and Indian Financial Institutions, to resolve the 'Last-mile' problems of power projects so that they achieve financial closure and start construction. The Group has since met on nine occasions.

 

Enhancing the CEA limit: The limit of capital expenditure of the schemes exceeding which concurrence of Central Electricity Authority is required has been amended from time to time. The limits were last notified in June 1999 and are as follows, as amended till date:

 

(i)         Rupees five thousand crores for thermal projects on the ICB route and conforming to the amendment dated 23rd May, 1997 to the tariff notification dated 30.3.1992.

(ii)        Rupees one thousand crores for other thermal generating stations on the ICB route.

(iii)       Rupees  twenty thousand  crores for the identified mega projects in the private sector whose scheme is approved by any agency or body authorised by the Central Government. 

(iv)       Rupees one thousand crores for hydro-electric generating station on the ICB route.

(v)        Rupees five hundred crores for R&M schemes.

(vi)       Rupees three thousand crores for captive plants established by Generating Companies provided that at least 50% of the installed capacity should be for captive / group captive consumption.

(vi)       Rupees two hundred and fifty crores for all other schemes,;

 

All  hydro-electric schemes utilising water of inter-state rivers shall be  submitted to the Authority for its concurrence (irrespective of the cost).

 

Policy on automatic approval for foreign direct investment: Projects for electric generation, transmission and distribution are permitted foreign equity participation up to 100% on the automatic approval route.  The categories which would qualify for such automatic approval are :

 

(i)         Hydro - electric power plants

(ii)        Coal/lignite based thermal power plants

(iii)       Oil / gas based thermal power plants

 

Other Policy Initiatives

 

Model Power Purchase Agreement: Model PPAs for thermal power projects and hydro-electric power projects prepared by  international consultants have been circulated to the State Governments and the SEBs.

 

Competitive bidding for Awarding Projects: The initial batch of projects were awarded generally on the basis of negotiations between the State Electricity Board (SEB) and a single developer (MoU route). After 18.2.1995, competitive bidding for award of power projects to private sector has been made mandatory.  However, certain categories of projects mentioned below, where the International Competitive Bidding (ICB) route may not be feasible, have been exempted from this route. Detailed guidelines have also been issued to the State Governments for adopting competitive bidding. An amendment to the tariff notification for competitively bid thermal projects was issued in May 1997 defining the manner in which tariff would be determined for such projects.

 

Guidelines for Private Sector Participation in Renovation and Modernization: The policy details out various options like lease, rehabilitate, operate and transfer(LROT), sale of plant and Joint venture between SEBs and private companies for promoting R&M programmes.  While deciding on the available options, the policy emphasizes on adherence to competitive bidding route.

 

Captive/Co-generation Plants: The policy encourages captive/ co-generation power plants by industry and also suggests, inter-alia, sale of excess power to the grid as per mutually agreed rates, access to transmission grid of the State on payment of wheeling charges, third party access for direct sale of power etc. Vide a notification issued on 1.9.2000, captive plants set up by generating companies and having a capital cost of upto Rs. 3000 crores,  have been exempted from the requirement of CEA’s TEC provided that at least 50% of the installed capacity would be for captive / group captive consumption.

 

Liquid Fuel Policy: Aimed at setting up of short gestation power projects based on liquid fuels and in order to have a quick capacity addition, the liquid fuel policy was announced in November 1995, which was modified from time to time. Under the policy, around 12000 MW capacity addition was planned based  on liquid fuels, viz, naphtha, HPS, LSHS, HFO, FO, refinery residue and petroleum coke.  This policy was modified in July 1998, where all other fuels except naphtha were taken out of ceiling of 12,000.

 

Relaxation of 40% cap for debt exposure by IFIs: The policy announced in 1991 envisaged that, an amount not exceeding 40% only of the total outlay for private sector units may come from Indian public financial institutions (IPFIs). The Government ,subsequently, has decided  that while there will be no bar to the extent of domestic debt raised by a project developer, subject to the need of maximising financing from external sources and prudential norms exercised  by IFIs, allowing a higher domestic debt component for projects which are developed based on indigenously sourced plant and equipment, would be more desirable.

 

Alternative Security Mechanism for financing of IPPs: The main factor responsible for the poor investment into the power sector is the poor financial health of the State Electricity Boards and non-availability of adequate payment security mechanism (escrow). Financial Institutions have been insisting on escrow as a payment security mechanism for lending to private power project. Since most of the States had problems with regard to escrowable capacity, many private power projects were unable to achieve financial closure. With a view  to find a solution to the escrow  problem and an Alternative Security Mechanism, in the eighth meeting of the Crisis Resolution Group (CRG) held on March 30, 2000 under the chairmanship of Minister of Power, various alternatives to resolve the escrow issue were discussed. In this meeting, it was decided that IPP financing should be linked with progress of reforms undertaken by the State Governments. The Financial Institutions are working out a mechanism to undertake financing  of IPPs on the basis of the Alternative Security Mechanism.

 

Response from the private sector

 

Foreign Direct Investment in power sector: At present, out of 95 private power projects, as mentioned above, 59 projects for around 36,700 MW capacity are having foreign developers. As per available information, an amount of around Rs. 13,585 crores foreign investment  have already been made in the private power sector.

 

Counter -Guarantees: The Government of India had in 1994 identified 8 projects for

extending its counter-guarantee. Counter-guarantee has been extended to the Jegurupadu Combined Cycle Gas Turbine (CCGT) (216 MW) of M/s GVK Industries in Andhra Pradesh, Dabhol CCGT (Phase-I) (740 MW) of M/s Enron Power Company in Maharashtra,Visakhapatnam Thermal Power Project(TPP) (1040 MW) of M/s Hinduja National Power Company Limited (HNPCL)  in Andhra Pradesh, Bhadravati TPP (1082 MW) of M/s Central India Power Company (CIPCO) in Maharashtra, Neyveli TPP (250 MW) of M/s ST-CMS Electric Company in Tamil Nadu, Mangalore TPP (1013.2 MW) of Mangalore Power Company in Karnataka and Ib Valley TPP (500 MW) of M/s AES Ib Valley Corporation in Orissa .  M/s Spectrum Power Generation Ltd. withdrew their request for counter-guarantee for the Godavari CCGT (208 MW) in Andhra Pradesh.

 

Prime Minister’s visit to USA

During Prime Minister’s visit to USA in September, 2000, Indo-US cooperation in the energy sector crossed a significant landmark with the signing of a number of agreements between the two Governments laying down a framework for joint cooperation in the coming years. The occasion also marked the conclusion of several joint development agreements between Indian and US energy companies which will result in the creation of a capacity of nearly 6170 MW and involve an investment of US$ 6-7 Billlion. Joint Development Agreements were signed between Power Trading Corporation and Southern Electric Asia Pacific and Reliance for the development of Hirma(3960 MW) project in Orissa, PTC and Unocal/Dakshin Bharat Energy Consortium for the development of Ennore LNG (1880 MW) project in Tamil Nadu, IDFC and Synergics Energy in respect of Shrinagar Hydro Electric project (330 MW) in Uttar Pradesh.

 

Cooperation with USA

            A Memorandum of Understanding was signed between Department of Energy and Ministry of Power, Government of India wherein it was agreed to establish a sub-ministerial working group on energy to conduct energy consultations for the purpose of enhancing the understanding of energy issues and promoting the exchange of information on energy  policies, programmes and technologies.  The life of the agreement is five years from 30^th September, 2000.  A Working Group on Energy headed by Secretary Power having representatives from Petroleum & Natural Gas, Coal and Non-Conventional Energy sector is proposed to be set up on the Indian side to identify and work on specific areas of cooperation.

 

ii)         A Protocol of Intent was signed between two countries for conducting the feasibility study to support the development of advanced power generation technologies in India.  As a first step, USAID will collaborate with Ministry of Power and NTPC in conducting a detailed technical and economic feasibility study for setting up a commercial scale Integrated Gasification Combined Cycle (IGCC) demonstration plant at one of the NTPC power plant sites.  The study will seek to establish: (i) the most suitable IGCC technology for Indian coal and environmental conditions; (ii) explore possible financing structures to make the technology most competitive for India; (iii) and develop a time-bound implementation plan for technology demonstration in India.  USAID has earmarked a sum of US$ 2.5 million for this purpose.  The contribution from the Indian side will be made by the NTPC.

 

iii)         A Protocol of Intent was signed between the USA and Government of India for USAID to cooperate with the Ministry of Power and its related agencies in their efforts to build the  long-term training capacity of India's power sector training institutes including National Power Training Institute.  The USAID has earmarked some funds (US$1 million) for this activity and hope to earmark some more funds from their SARI/E programme.

 

Cooperation with UK

 

            A draft cooperation agreement with the UK in the power sector is proposed for which a Working Group would be set up. The first draft for this has been exchanged with the British Government and we are awaiting the response of the British Government on the observations raised by us on the draft submitted by them.

 

Training

 

            National Power Training Institute (NPTI) has been asked to organise a seminar/workshop to prepare a draft training policy for power sector personnel in view of the increasing needs of the power sector as well as the need to increase efficiencies and competencies in the sector.

  

STATUS OF PRIVATE POWER PROJECTS

 

S.NO.	DESCRIPTION	NUMBER	CAPACITY(MW)
1.	Projects techno-economically cleared by CEA   - Thermal   - Hydro   - Total	52 5 57	27859.5 1516 29,375.5
2	Detailed project reports under examination in CEA   - Thermal                  - Hydro   - Total	8 1 9	2553.58 70 2623.58
3	Private power projects which have been commissioned.	24*	5065.95
4	Private power projects under construction	19*	5296
5	Target Set for IPP capacity addition under mid term review of 9th Plan.		8363
*:         This includes those projects also which do not require the techno-economic clearance of CEA & includes licensees also.

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