Power Potential Area For Fdi

The Union power ministry has identified hydel power generation and transmission and distribution as potential areas of investment for private sector in the country.

Speaking at the opening session Power-Gen Asia '98 conference yesterday, Union power secretary VK Pandit said the power sector offered good prospects for foreign investors.

He said the country has an untapped hydel potential of around 85,000 mw and an underutilised transmission and distribution potential.

India is the second largest potential market for new electric power generation capacity in the world with 140,000 mw of new generation capacity to be added by the year 2007.

Pandit said the "government has sent positive signals by pushing through reforms in this sector and there is national consensus on private investment in power generation, transmission and distribution."

The government had recently cleared a legal loophole by amending the Electricity Act whereby investments into transmission sector were made possible as an independent activity. Earlier operators having stake either in generation or in distribution could take up investments in power transmission.

Pandit said that transmission of electricity was earlier a separate activity but now with the legal anomaly cleared, private sector could invest in transmission, but the overall control would remain with the government.

He further added that the formation of the Central Regulatory Commission and similar regulatory bodies at the state level would enable in ushering in financial reforms in the Indian power sector.

Commenting on the financial status of the state electricity boards, Christopher Brown, Managing Director of Singapore Power said that the South East Asian Economic Crisis has not effected India as they were not exposed to currency fluctuations----but could get effected in future as private projects start kicking off.

But with the regulatory commissions slowly taking shape, officials said that the financial viability of the board and the cost of power will be kept under control.

Speaking at another session, Rajesh Kakkar, joint secretary in the ministry of power said that the government to date has cleared around 46 power projects totaling a capacity of some 22,000 mw----of which around 2276 mw of projects had been commissioned.

He said that the government was planning to commission/add around 40225 mw for power projects during the IX plan. Of this, around 12,000 mw of capacity addition is expected from private power projects , while 17,500 mw would come through central sector power projects. The balance capacity would come from state level projects adding to around 10,747 mw.