The Hindu : Big hike likely in power sector investment

Online edition of India's National Newspaper
Saturday, Jul 13, 2002

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National

Big hike likely in power sector investment

By V. Jayanth

CHENNAI July 12. There will be a 270 per cent increase in public sector investment in the power sector during the Tenth Plan period compared to the previous plan. This is because the private sector had not come in with the projected investments during the Eighth and the Ninth Plans.

After a moderate addition of about 28,000 MW during the Ninth Plan, the Union Power Ministry is now confident of achieving the projected 41,000 MW increase in generation capacity in the Tenth Plan, thanks to the public sector commitments.

The Union Power Minister, Suresh Prabhu, said in an interview here today that only 7,000 MW of the new capacity would be in the private sector. The rest would be between the Centre and the States. And for the first time, hydro power would account for nearly 14,000 MW of additional capacity over the next five years. The NTPC had committed itself to providing 10,000 MW. Another 10,000 MW would be added through the renovation and modernisation programme undertaken both by the Central power undertakings and the State Electricity Boards (SEBs).

Mr. Prabhu, who was here to witness the signing of an MoU with the Tamil Nadu Electricity Board for a 1000 MW project, explained that the private sector had not come in in a big way because of the existing regulatory framework. With most of the State Governments now signing MoUs with the Centre and committing themselves to power reforms, the climate was changing.

Further, the Centre would soon pass a Bill to enable the private sector power generators to directly sell to consumers. To begin with, it would be for the ``bulk consumers'', but this could gradually extend to other sections.

When this legislation was passed, the private sector would be in a position to invest and be assured of selling its power. The present crisis of confidence stemmed from the fact that the SEBs were unable to pay the private producers, because of their own non-viability.

Mr. Prabhu said the Prime Minister had agreed to convene an all-party meeting on power sector reforms so that there could be a national consensus on this crucial sector. Such a consensus would put an end to the ``politicisation'' of reforms and tariff increases in power.

Right now, the State Governments wanted to increase power tariff but the Opposition parties made political capital out of it. But the very same Opposition parties, which were in power in other States, badly wanted to undertake reforms.

Another major feature of the Tenth Plan programme, the Minister noted, was the expansion of the national power grid to handle about 30,000 MW by 2012. This would enable the transfer of power from a ``surplus'' region to a ``deficit'' region and obviate the need for more investments in generation. ``The focus must now be on transmission and distribution and we want to open up the distribution sector to the private sector,'' Mr. Prabhu said.

Rural electrification would be another priority, with about 80,000 villages in the country still without power. Under a crash programme, the Centre wanted to light up every village within seven years. ``If we proceed at the current pace, Bihar alone may require about 800 years to electrify all its villages, whereas Tamil Nadu has already achieved 100 per cent rural electrification. We have to concentrate on a few States.''

He was happy that the ``mindset'' had changed over the past two years with more States realising the futility of subsidising power supply and the gradual transfer of the responsibility of fixing the tariff to the State Electricity Regulatory Commission.

On the Enron controversy and the future of the Dabhol power, the Minister said Maharashtra needed power and there could be fresh negotiations to buy it. There would be an ``assets sale'' in the project, which could help pay out the lending institutions.

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