Deputy Chairman of Planning Commission Montek Singh Ahluwalia, on Wednesday, called for immediate steps to resolve the issue of price pooling for imported and domestic gas and coal for power plants in view of the massive shortage of such fuels being faced by the sector.

Addressing the Indian Energy Forum here, Dr. Ahluwalia said he did not see these issues resolved unless decisions were taken at the highest level. The prices of both coal and gas, domestic and imported, had to be pooled, he added.

Under the proposed pooling mechanism, which under the consultation process but faces opposition from industry players, the cheaper domestic coal and gas prices are averaged out with a bit expensive imported fuel to get a reasonable rate for the feedstock for power plants.

Dr. Ahluwalia said there was a need to put in place a serious investment plan for the power sector. “We have to appreciate that the generation of power is increasingly led by the private sector. This investment has to be financed. Financing by banks in either generation or transmission sectors needs to have viability of the operation on the basis of the quality of the entrepreneur on project management skills. This would not have been a problem if the banks had a very strong position in terms of their own balance-sheet. There is a down turn, the non-performing assets (NPAs) are on the rise, and the capital adequacy of the banks is under stress. These are happening at a time when globally there is huge pressure on banks,’’ he said.

Dr. Ahluwalia said there was also a need to recognise the problems of the power sector, and that was why the Cabinet in September approved the restructuring plan for the State electricity boards (SEBs). The government had approved restructuring of Rs.1.9 lakh crore debt of SEBs to bail out the near-bankrupt power distribution companies, and make them viable by incentivising the reforms in the distribution sector along with constant hike in tariffs.

The Deputy Chairman of Planning Commission said the Electricity Regulation Act was not properly implemented, and large consumers of power should be encouraged to enter into purchase agreements. “Our interpretation of the Electricity Regulation Act is that if you are saying that open access is mandatory for all consumers above one megawatt, then there should be no tariff regulation on supply to such consumers. Such consumers should be encouraged to enter into purchase agreement on a negotiated basis,’’ he said.

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