Secretaries panel to discuss state power boards' health

The panel of secretaries, headed by the Principal Secretary to the Prime Minister, is likely to discuss the financial health of state electricity boards in the next meeting.

The date for next meeting of Committee of Secretaries (CoS) has not been finalised yet but the agenda is likely to be the financial condition of power distribution companies, a power ministry official said.

In its first meeting held on February 1, the panel had decided that Coal India would sign fuel supply agreements with power plants, that have commissioned before December 2011, by March this year.

"Private power companies had listed out a number of hurdles in the sector -- fuel shortage, financial health of the discoms, levying import duty, one by one all of them would be discussed ... May be the issue of state electricity board or distribution companies would be taken up next," a Power Ministry official said.

The Prime Minister had constituted the panel after top industrialists, including Ratan Tata (Tata Power), Anil Ambani (Reliance Power), Anil Agarwal (Sterlite Energy), Prashant Ruia (Essar Power) met him last month and discussed the numerous issues impacting development of the sector.

The panel is headed by Pulok Chatterji, Principal Secretary to Prime Minister Manmohan Singh.

Since, power generation companies supply electricity to state electricity boards by signing power purchase agreements (PPAs), their economic condition impacts the electricity producers in return.

The power sector is facing a serious crisis due to shortage in supply of fuel.

Earlier, the panel had decided that Coal India would sign Fuel Supply Agreements (FSAs) with power plants that have entered into long-term Power Purchase Agreements (PPAs) and have been commissioned or would get commissioned on or before March 31, 2015.

For power plants that have been commissioned up to December 31, 2011, FSAs will be signed before March 31, 2012.

As per the FSA, Coal India would have to assure minimum 80 per cent fuel supply to power utilities failing which it would be penalised. In case, the company exceeds the 90 per cent supply level it would be incentivised.