House Panel Clears Power Transmission Bill

The parliamentary standing committee on energy has cleared the power transmission bill. This was disclosed by the minister of state for power Y K Alagh at a session on power at the World Economic Forum, here yesterday.

The minister also said that 20 private power projects had tied up finances from Indian financial institutions amounting to nearly $3 billion which in turn would add around 7500 mw of capacity. These include projects both in the thermal and hydel sector.

Alagh also said that the Power Grid Corporation, which has been charged with the responsibility of creating the National Grid (interconnecting all the regions in the country) would be given adequate leverage to raise about Rs 18,000 crore through a change in its capital structure. This would incorporate increasing its equity-to-debt ratio by converting part of its loans into equity

Allaying fears of potential investors in the power sector, Alagh said that since the transmission bill has been cleared, it can now be directly taken up by the Lok Sabha, when it sits again.

The Bill provides for power transmission to be taken up as an independent activity by the private sector. Under the present electricity laws, the private sector can enter this area only as a licensee, whereby his profit earning capacity is restricted.

The Bill was sent to the standing committee early this year after objections were raised by some opposition parties.

Alagh also pointed out that when privatisation was started in the early 90s the details for this attempt had not been worked out. He pointed out it was imperative that reforms in the sector should be looked at in a holistic picture even within the existing structure itself. There cannot be any instantaneous reform package that would take care of the problem in the power sector.

He highlighted that states had initiated reforms as was best suited to them. The World Bank, Asian Development Bank (ADB) as well as the public sector financial undertaking Power Finance Corporation were actively involved with the states for undertaking the reforms.

He added that presently the union power ministry along with the Central Electricity Authority was working at increasing the electricity supply from the existing capacity by undertaking renovation and modernisation work. Apart from this the ministry was also backing the state governments to increase the power tariffs in the agricultural sectorwhich is one of the prime areas of concern for the private sector.