Power Ministry rules out direct regulation of tariff

Launches integrated scheme for power sector development worth RS 76,623 cr over five years

The Ministry of Power has ruled out any direct regulation of power tariff as it will be detrimental to the efforts done by both the government and efficient power companies in streamlining the power generation, distribution and transmission.
 
While these activities entail cost but in the long run this strategy will reduce the total cost of supply of electricity to the consumer. On one hand, the government cannot empahsise discovery of tariff through competitive  bidding  which is a parameter based on market driven efficiency and on the other hand, contemplate to put  regulate the tariff, said official sources.

The issue of regulating power tariff has been suggested as an internal recommendation to bring down the overall cost of power for consumers.

 

In fact, the ministry has launched an integrated power development scheme at a total financial outlay of Rs 76,623 crore for strengthening of sub transmission and distribution networks in the urban areas, metering of distribution transformers/ feeders/ consumers in the urban areas and enablement of the distribution sector through information technology (IT).

All distribution companies including private sector and state power departments will be eligible for financial assistance under this scheme.

One salient feature of the scheme which differentiates it from other scheme is that the financial assistance is for both  development of distribution network for power generated from both conventional and  non conventional sources like solar panels, wind mills etc. 

However, if private distribution companies take financial assistance, the scheme has to be run through a state government agency or state owned companies who will own the assets to be handed over to the private company over a mutually agreed period of time.

Power Finance company is the nodal agency for approval of the scheme and funds will be released in phases upon completion of agreed milestones in the agreement.

The ministry is of the view that it will be too short sighted measure when the overall sector is moving towards an overhaul both in terms of fuel supply, optimization of operations, adopting new business models.

 
In fact the ministry has decided to increase the share of renewable, in addition to the generation capacity addition target of 88,537 MW from conventional sources.

While the capacity addition of about 30,000 MW has been planned from Renewable sources during 12th Five Year Plan, the cumulative installed capacity of renewable power is expected to be 55,000 MW by March 2017.