Financial Daily from THE HINDU group of publications
Thursday, Feb 03, 2005
Industry & Economy - Power
Govt approves electricity policy Aim to increase per capita availability to over 1,000 units
New Delhi , Feb. 2
THE Union Cabinet on Wednesday cleared the National Electricity Policy, which aims at providing electricity connections to all households over the next five years.
The policy, which has been formulated under provisions of Section 3 of the Electricity Act, 2003, is expected to serve as a guideline for both the Central and State power regulatory establishment.
"The Policy recognises the pre-eminent role of State-run power firms as well as private firms in the overall development of the power sector," the Finance Minister, Mr P. Chidambaram, told newspersons after the Cabinet meeting here.
He said the policy aims at achieving a financial turnaround of the power sector, which has been saddled with massive financial losses and plans to achieve open access as mandated by the Electricity Act. He said details of the policy would be announced later.
The policy could, however, come in for some flak from the Left parties, which have been pressing the Government for a review of some of the provisions of the Electricity Act 2003 prior to announcing the policy.
Responding to a query on why the Policy had been cleared when the Electricity Act itself was being reviewed, Mr Chidambaram said that only "some provisions" of the legislation were under review and not the whole Act.
Terming the policy as a "milestone in the electricity sector," he said it had been evolved in consultation with stakeholders and views of the State Governments, the Central Electricity Authority, the Central Electricity Regulatory Commission and utilities had been taken into view.
A draft prepared earlier by the NK Singh committee, had faced criticism due to alleged lack of consultation with stakeholders, including the State Government and some regulators.
The new policy also set a target for achieving the goal of fully meeting the electricity demand by 2012 by overcoming energy and peaking shortages and making available spinning reserve.
The policy recognises the role of PSUs as well as private sector for generating additional capacity in the system, the he said.
The policy proposed to increase the per capita availability of electricity to over 1,000 units by 2012. Currently, the per-capita availability is just over 500 units. The policy also talks about making a minimum lifeline consumption of 1 unit per household in a day as a merit good by 2012.
With the National Electricity Policy getting the Government's nod, the Power Ministry is expected to come out with a slew of other policy directions including the National Tariff Policy, Rural Electrification Policy, National Electricity Plan, Guidelines for Competitive Bidding over the next few months.
The Electricity Act, which was passed in May 2003, aims to attract the $200 billion needed over the next 10 years to double generation capacity by allowing power producers to sell electricity directly to users, rather than to loss-making State electricity boards.
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