Cii Scheme To Modernise Old Power Plants

The Confederation of Indian Industry (CII) has suggested a new concept for financing the renovation and modernisation (R&M) programme of old power plants. The concept, termed as `FIRM, has already got an `in-principle clearance from the power ministry.

The concept involves four initiatives; the schemes would be funded by financial institutions against a bankable guarantee, entrepreneurs would provide power plant engineering as a whole, and not just the turbine or boiler engineering in isolation, refurbishing of the power plants by prequalified vendors must be on a competitive basis and the whole programme has to be monitored closely to ensure return on investment.

The concept, suggested by CII, is being advanced as an alternative to the existing policy on lease, rehabilitate, operate and transfer (LROT).

The power ministry plans to create a `Risk Development Fund to finance these R&M schemes. The state governments, power ministry, power finance corporations and the vendors would be expected to contribute to this corpus of funds.

According to the CII study, LROT failed to stimulate the R&M programme because of the apathy of both the vendors and the state electricity boards towards privatisation of plant operation.

The new concept would not only provide continuity to the earlier scheme but also relate itself to the operational independence of state electricity boards.

The power ministry would be writing to the states for their comments on this new scheme and then constitute an implementation committee. It would be chaired by the power ministry, with representatives from the states, the Central Electricity Authority, NTPC, PFC, Planning Commission and financial institutions.

The concept of financing R&M programmes is the outcome of a CII task force on refurbishing of old power plants