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UMPP: disparities in price discovery

BANGALORE: Reacting to the budget proposals on the power sector, V. Ranganathan, Reserve Bank of India Chair Prof., Indian Institute of Management, Bangalore, said the actual generation specified in the budget documents would fall short of the target.

On the Ultra Mega Power Project (UMPP), Mr. Ranganthan said it had been good for initial price discovery, but now it was not as effective as it was for Sasan. “Where is Rs. 1.19 a kWh for Sasan and where are the figures around Rs. 2.23 and more for the second and third projects. A true competition harmonises prices, not foster such huge disparities,” he said.

On the Accelerated Power Development and Reforms Project (APDRP) and the Rajiv Gandhi Grameen Vidyutikaran Yojna, he said throwing money at them was not the solution.

“The Government is throwing money on rural electrification, but States are giving shabby treatment to rural supply; hardly four to five hours of continuous supply is there in rural areas,” he said.

Similarly, for APDRP, it would be successful only with privatisation of SEBs, which is in States’ jurisdiction. The distribution reform does not require money. It requires management, which SEBs woefully lack.

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