THE TURNAROUND HAS BEGUN
Anant
G. Geete*
Power is a critical
infrastructure for the country’s economic development. The Ministry
of Power has given a major thrust to speed up the development
and reforms of the power sector. It has set an agenda for providing
power to all by 2012. The Ministry seeks to achieve this objective
through a comprehensive and holistic approach to power sector
development at the national, state, SEB, distribution, feeder
and consumer levels.
To meet the projected
power requirement by 2012 an additional capacity addition of 100,000
MW is required in the next two Five Year Plans. A capacity of
nearly 41,000 MW would be set up in the 10th Plan and the remaining
in the 11th Plan with a stronger focus on hydro power. The Central
sector would contribute 22,500 MW, the State sector 11400 MW and
the Private Sector 7,100 MW in the 10th Plan. Projects of above
19000 MW are already under construction while projects of 8,900
MW aggregate capacity have been given the requisite approvals.
The outlay for the power sector has been raised from Rs.45,591
crore during the 9th Plan to Rs.143,399 crore in the 10th Plan.
The Conference of
Chief Ministers in March, 2002 under the chairmanship of the Prime
Minister resolved that all villages should be electrified by 2007
and full coverage of households be achieved by 2012. Rural electrification
is now treated as a basic minimum service under the "Pradhan
Mantri Gramodaya Yojana" (PMGY) from 2001-02. It is proposed
to cover all the 62000 villages that can be electrified through
grid connectivity during the 10th Plan. The balance 18,000 remote
villages are to be electrified through the use of non-conventional
technologies.
Power generation
resources are unevenly distributed in the country. The Hydro resources
are mainly located in the Himalyan region and coal, the basis
of thermal power in eastern and central parts of the country.
Optimum and economic utilization of these resources require inter-regional
transmission of power from generation centers to load centers.
The concept of a strong inter-connected National Power Grid across
the country is, therefore, of crucial significance. The present
inter-regional power transfer capacity of about 5000 MW will be
enhanced to 8000 MW by December, 2002 and 23,500 MW by the end
of the 10th Plan.
Reforms
Reforms in the power
sector were initiated in 1991 by liberalizing generation. It is
clear that a commercially viable distribution is necessary to
sustain investment in generation and transmission. For attaining
this objective, comprehensive reforms of the State Electricity
Board (SEBs) have been undertaken. The SEBs of Orissa, Haryana,
Andhra Pradesh, Karnataka, Rajasthan, Uttar Pradesh, Madhya Pradesh,
Uttaranchal and Delhi have been unbundled. Power distribution
has been privatized in Orissa and Delhi. To rationalize the tariff
fixation mechanism, the Central Electricity Regulatory Commission
(CERC) has been set up by the Union Government and State Electricity
Regulatory Commissions (SERCs) have been set up in 21 States.
The SERCs of 13 States have issued tariff orders.
Even though distribution
of power is a state function, the Ministry of Power has taken
a pro-active role to modernize and strengthen the distribution
system. The Central Government launched the Accelerated Power
Development Programme in 2001-02 with an outlay of Rs.1000 crore.
It has been re-designated as Accelerated Power Development and
Reform Programme from the current financial year with an outlay
of Rs.3,500 crore. The scheme, besides providing support to the
States for investment in sub-transmission and distribution will
also have a reward component for States which have been able to
reduce the gap between unit cost of supply and realization. The
emphasis of distribution reforms is on achieving metering of all
11 KV feeders, 100 per cent metering of all consumers, reduction
of T&D losses and control of theft to ensure quality supply
of power to all consumers.
The Ministry of Power
has signed MOUs/MOA with 24 States to expedite the process of
reforms. The MOUs provide for metering of all 11 KV feeders, 100
per cent metering of consumers, energy audit, reduction of T&D
losses and attaining the commercial viability in distribution.
Due to poor financial
health, a number of the SEBs defaulted on their payment to power
generating companies, coal suppliers and railways. The cumulative
amount due to these agencies from the SEBs exceeds Rs.41,000 crore,
seriously impacting the borrowing capacities of the SEBs. A scheme
of one-time settlement of outstanding dues has been formulated
to wipe out the entire outstanding dues. Nineteen States have
accepted the scheme and signed the requisite Tripartite Agreement.
The project clearance
process has been simplified. The private sector can now participate
in generation, transmission and distribution of power. Automatic
approval for 100 per cent foreign equity was permitted for foreign
investment upto Rs.1,500 crore. This ceiling has been removed
since June, 2000. Captive power projects costing less than Rs.3000
crores and supplying less than 50 per cent of the installed capacity
to the grid have been exempted from the requirement of clearance
of the CEA. Similarly, for any generating project costing less
than Rs.2,500 crore, where the tariff is approved by the Regulatory
Commissions, the requirement of techno-economic clearance of CEA
has been dispensed with. For speedy clearance of the central sector
hydro power schemes, a three stage clearance procedure has been
adopted.
To provide for a
liberalized framework, a comprehensive Electricity Bill, 2001
was introduced in the Lok Sabha in August, 2001. The Bill provides
for delicensing of generation, non-discriminatory open access
in transmission, power trading, rural electrification, mandatory
requirement of SERCs, mandatory metering and stringent provisions
against theft of power.
The Power Trading
Corporation (PTC) has been set up. Trading activities of PTC have
already started from surplus regions to deficit regions. The trading
volume went up to 1,617 million kwh during 2001-02.
To achieve a broad
consensus and general awareness among the public on the need for
reforms in the power sector and also to share with opinion leaders,
students and the general public more than 2085 road shows were
organized by the Ministry of Power and its CPSUs in 2001-02.
The Energy Conservation
Act, 2001 has been enacted to provide for efficient use of energy
and its conservation. The Bureau of Energy Efficiency (BEE) has
been set up and the Hon’ble Prime Minister released its action
plan on August 23, 2002. (PIB Features)
*Union
Minister of Power
