M A I N   N E W S

PM raises pitch for power sector reforms
Tribune News Service & Agencies

Shimla, May 29
Underlining the need to put the best foot forward in infrastructure development, Prime Minister, Manmohan Singh today called upon the states to ponder why the functioning of electricity boards was not improving and the power sector not attracting private capital.

He posed these questions during an interactive session with power secretaries of the states convened here today to get feedback from states regarding the progress of power sector reforms and the implementation of the Electricity Act 2003.

He said infrastructure development was key to speedy progress and best brains should be put on the job. Power was a critical infrastructure as the growth of the economy depended upon availability of “quality” power at the “right price”.

He spoke little and sat through for almost three hours to listen to the response of the secretaries to the questionnaire circulated before the meeting.

The Prime Ministers asserted that the “unbundling” of the state electricity boards (SEBs) was not a goal in itself. The real objective of the reforms was to improve efficiency, economy, enhancement of power generation and ensuring a competitive environment.

He also wanted to know the weaknesses of the central public undertakings and the difficulties in the implementation of the any element of the Electricity Act 2003 because of the lack of clarity in definitions.

For a competitive environment, he asserted that an open access system was essential and wanted to know whether it was possible in near future and under what circumstances.

Most of the secretaries appreciated the roles of regulators but pointed out that problems arose when their directions were not complied with. A few secretaries were more candid and bluntly said that political stability was a must for carrying out reforms. Frequent elections led to populist decisions, which negated the reforms.

The secretaries of states like Delhi, Gujarat and Haryana, where the state utilities had been unbundled, said miracle should not be expected from unbundling but it had certainly brought about a remarkable improvement. For instance, in Delhi the peak hour shortage and energy losses had declined appreciably. The amount of subsidy, which the government was giving annually, had come down from Rs 400 crore to about Rs 180 crore.

The attention of the Prime Minister was drawn to the irregular and inadequate availability of fuel like coal and gas, as a result of which the power plants were operating much below their installed generation capacity. Long delay in granting various clearances was stated to be one of the reasons for the reluctance of the private sector to take up projects.

Union Power Minister P.M. Sayeed said that power-generating states could impose consumption tax on power but could not levy generation tax.

Talking to mediapersons here, he said the imposition of generation tax on hydro-power was an excise subject and come under the ambit of the Union Government.

The minister said the Central Government was sympathetic towards the demand by Himachal Pradesh for the imposition of generation tax but it was not possible to allow such a tax. Further imposition of consumption tax was a state subject.

Mr Sayeed asked the power secretaries to ensure that existing capacity was utilised to the minimum extent possible. In many states, he pointed out, power plants were operating much below 80 per cent plant load. He said each state should target reasonable capacity addition linked to the rate of growth of demand.

He also asked the states to pay more attention to check power loss during transmission and distribution. He emphasised the need for drastic reduction in technical commercial losses and said checking electricity theft had become imperative.

Tariff rationalisation, proper billing and collection required immediate attention and urgent action, he added.

The Union Minister said the conference was aimed at receiving first-hand information from the states regarding the problems and the remedial action that could be taken. The sector not only should become commercially viable but meet the overall objective of providing quality and affordable power.

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