Prime Minister Manmohan Singh is learnt to have constituted a Committee of Secretaries (CoS) under his Principal Secretary, Pulok Chatterjee, to work out an time bound action plan to chalk out plans on coal and gas shortage, cheap imported coal, hike in power tariffs and unleashing second generation of power reforms.

The decision was taken after a meeting with the Who’s Who from the power sector. The power sector corporate honchos pointed out that the meetings of the Empowered Group of Ministers (EGoM) for taking decisions on addressing the concerns of the power sector have not taken place for a long time.

The continued shortage of coal and gas, coupled with rising cost of imported coal had made power projects unviable. In such a scenario, any delayed decisions were only hurting the investor sentiment and leading to uncertainty for those who had already pumps huge amount of funds in massive projects totalling around 90,000 MW.

“The meeting with the Prime Minister was very positive and he appreciated the gravity of the situation. He assured that all the problems would be resolved soon and asked his officials and Cabinet colleagues to draw up an action plan for time bound addressing of issues,’’ Association of Power Producers (APP) Director General, Ashok Khurana said after the meeting.

In response to the concerns expressed by the corporate leaders, Dr. Singh assured them that the Government was committed to giving a push to the power reforms. He said a CoS under Mr. Chatterjee would work out a 30-day, 60-day and 90-day action plan to address the short and long term concerns of this sector and specially address the issues raised during Wednesday’s meetings.

Secretaries from the Ministries of Power, Petroleum, Coal, Environment and Finance would be a part of the panel. The Prime Minister said that he would ask the concerned Ministries to get the EGoMs convened at the earliest so that decisions are not delayed and policy is not put on hold. At the same time, he appreciated the initiative taken by the industry leaders like Anil Ambani and Ratan Tata to convene this meeting and work out a solution to their problems.

In their submission made to the Prime Minister, it was pointed that despite significant recent capacity additions, electricity generation is constrained by domestic fuel shortages and price related issues with imported coal, as also the capacity addition targets going forward is expected to seriously get thwarted, if the issues raised by them are not addressed.

It was pointed out that distribution segment continues to be the weakest link in the power sector. The Shunglu Committee has estimated that losses have increased from Rs. 17,000 crores in 2006 to Rs. 57,000 crores in 2010 due to increasing gap between average revenue realised per unit (ARR) and average cost of supply per unit (ACS) due to inadequate and delayed tariff revision; high level of aggregate technical and commercial (AT&C) losses; and high levels of outstanding debt on discom’s balance sheets, resulting in higher interest costs.

Among others who took part in the meeting included the Finance Minister, Pranab Mukherjee, Environment and Forest Minister, Jayanthi Natarajan, Deputy Chairman Planning Commission, Montek Singh Ahluwalia. Prominent industrialists apart from Mr. Ambani and Mr. Tata included L. Madhusudan Rao, Anil Aggarwal, Prashant Ruia and Ashok Hinduja.

This report has been corrected for a typographical error

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