Power sector expects radical reforms in Budget

The power sector expects major shifts in policies and incentives for rapid growth in the Union Budget to be presented on March 16 for better performance during the X11 Five year Plan. File photo  

With gross failure to meet targets in the XI Five Year Plan, the power sector expects major shifts in policies and incentives for rapid growth in the Union Budget to be presented on March 16 for better performance during the XII Five year Plan, said D. Shina electricity finance expert.

Talking to The Hindu on the expectations of the power sector from the Union Budget 2012-2013, Dr. Shina said that the XI Five Year Plan which ends this month had targeted an additional generation capacity of 78,000 MW but the actual achievement was only around 40,000 MW.

Added to that the tax holiday enjoyed by power projects will also expire this month.

One of the major hurdles in economic growth in the country is shortage of power. The budget to be presented is expected to project an economic growth rate of 7.5 per cent to 8 per cent. In this context it is expected that the budget will put forth major steps in the power sector too to have a matching growth.

Dr. Shina said that the new policy of the Central and State governments subsequent to the enactment of the Electricity Act 2005 to distance themselves from the power sector is now being questioned. Efforts from the private sector to build ultra mega power plants had a serious setback due to shortage of availability of equipment and coal.

In this backdrop the power sector will expect and extension of tax holiday and concessions in fuel price. This is because efforts to arrest skyrocketing cost of power production are vital for economic growth. It means concessions in all elements of electricity production.

At the same time the stalemate in growth of the power sector in Kerala was due to entirely different reasons, Dr. Shina said. The potential to produce abundant quantities of electric power in the State could not be tapped because of the absence of a proper vision towards hydel power.

The lack of a single window clearance system plus the lack of coordination between different Central agencies stood as hurdles in tapping the State’s generation potential of around 2000 MW. This had seriously affected the economic growth of the State. As the projects were shelved because of Central objections, Kerala is eligible for compensation.

She said that keeping one State out from the developments in electricity generation creates other problems too. The major one is the congestion in the transmission corridor. Huge climb in transmission loss is yet another problem. In this context Kerala expects new policies and procedures to clear hydel projects.

An environment preservation fund to develop and implement steps to compensate environmental damages due to hydel projects which was expected in the last Union Budget is keenly expected in the coming Budget. For an economic growth of 8 per cent, the power sector has to grow by 11 per cent to 12 per cent according to accepted norms. For this to become a reality the Union Finance Minister has to allocate for the power sector, she said.

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Printable version | Sep 17, 2021 4:51:05 PM |

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