Struggling to meet the 11th Plan revised target of 62,000 MW of capacity addition from 78,000 MW, due to shortage of coal, non-availability of gas, high cost of imported coal and tardy pace of various power projects, the United Progressive Alliance-II government is preparing to unleash a second set of power sector reforms, including open access to consumers to choose their electricity supplier and restructuring of power utilities of seven major States — including Uttar Pradesh and Tamil Nadu.
The reforms come in the backdrop of a recent report that revealed that the accumulated losses of the power utilities across the country ran into Rs. 1.5 lakh crore and annual losses were around Rs. 55,000 crore putting a severe strain on the financial health of the distribution utilities. Prime Minister Manmohan Singh is likely to chair a high-level meeting to discuss the proposals aimed at unlocking the power sector and making it more attractive for private investment.
Report under way
The report on the reforms prepared by Planning Commission member (Energy) B.K. Chaturvedi is being finalised by Deputy Chairman of the Planning Commission Montek Singh Ahuwalia, and the Law Ministry. It is expected to be finalised by March 2012.
Under the recommendations on Open Access, the view is that distribution licences should inform all consumers of 1MW and above that they could choose their electricity supplier. Other suggestions are: State power utilities should provide power to open access consumers at negotiated rates and not regulated rates; the State Electricity Regulatory Commissions should specify reasonable tariffs to be charged by distribution companies for providing standby supply; State load despatch centres should be upgraded in a time-bound manner to enable open access and 25 per cent of discretionary allocation of 15 per cent of central public sector undertakings generation must be made available for direct sale to open access consumers.
Expert group set up
An expert group has been constituted under Mr. Chaturvedi to make an assessment of the cumulative losses of distribution utilities of the seven major States. It has been asked to suggest a strategy for capital restructuring of these power discoms, including commitment by other stakeholders like State governments. It would also suggest a roadmap and monitoring mechanism for implementation of above.
