Financial Daily from THE HINDU group of publications
Monday, Jul 11, 2005
Industry & Economy - Power
Power Ministry moots transparent tariff policy
Kolkata , July 10
IN a bid to attract private investment in the areas of power distribution, transmission and generation, the Union Ministry of Power has decided to introduce a transparent national tariff policy indicating the likely cost of power in each State.
Although a draft tariff policy has been circulated to all stakeholders for discussion, the Ministry is keen to announce the tariff policy, ensuring that the power sector is made attractive for investments.
Speaking at a business dialogue session on `National Electricity Policy & Draft Tariff Policy', organised by the CII, the Additional Secretary in the Union Ministry of Power, Mr Ajoy Shankar, said that the rate of return in the electricity sector should be such that it allows generation of reasonable surplus for growth of the sector.
Mr Shankar said that the Power Ministry was committed to ensuring that 100 per cent requirement of quality power to all consumers is met by 2012, while efforts are on to provide electricity to all households in the country within the next five years.
Moreover, per capita availability over 1,000 units would be ensured, and to achieve this target by 2012, an additional capacity of about 1,00,000 MW needs to be created, entailing in investment of about Rs 9,00,000 crore.
Mr Shankar said that the role of private participation in generation, transmission, and distribution would become increasingly critical in view of the rapidly growing investment needs of the sector.
Hence, his Ministry wants the Centre and State Governments to develop workable and successful models for public-private partnership.
According to Mr Shankar, coal would continue to play a pivotal role in the creation of additional power generation capacity. (About 70 per cent of the existing generation is based on thermal power.)
He admitted that non-availability of fresh coal linkages from Coal India Ltd was posing a problem for the creation of thermal capacity.
The Power Ministry is negotiating with the Union Ministry of Coal to resolve the crisis.
However, under the new National Electricity Policy, priority would be given to hydel power generation as well as generation based on renewable energy sources such as wind and biomass. Nuclear power projects would be set up only to maintain base load.
The Government would encourage setting up of thermal power plants at coal pit-heads, as transportation of power would be less expensive than transportation of coal to long-distance power stations, he said.
Mr Shankar was of the view that the level of subsidisation could be decided by the State Government keeping in view the relevant aspects, but the draft tariff policy has emphasised that provision of free power is not desirable, as it will encourage wasteful consumption besides, in most cases, resulting in lowering of water level. This, in turn, may lead to avoidable rapid water shortage for irrigation and drinking purposes.
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