Model Fuel Supply Pact For Ipps Soon

The government is formulating a model agreement to ensure uninterrupted fuel supply to private power producers. This was disclosed here on Thursday by Prime Minister H D Deve Gowda while delivering the valedictory address at India Power "" 2000 AD and beyond organised by the Independent Power Producers Association of India.

The agreement is based on similar agreements in vogue in other countries. Gowda said such an agreement was critical for the success of private power plants.

He said the Central Electricity Authority has so far given techno-economic clearance to 90 power projects being promoted by independent power producers (IPPs). Of these, the Indian financial institutions have given approval to 64, while work has started on another 14.

The government has initiated legal action to facilitate private sector participation in transmission and distribution of power, Gowda said.

The Prime Minister admitted that there were problems in tying up of finances by the private sector. The government was looking into the problem and was willing to extend all possible help to IPPs, he said.

Gawda said steps were being taken to set up independent regulatory bodies, both at the Centre and in states, to oversee the working of the state electricity board and to bring about an improvement in their functioning.

He said extending counter-guarantees to some power projects was only an interim measure. Long-term solution lay in improving the financial health of SEBs.

Most of the states have shown a willingness to undertake SEB reforms based on the Orissa model.

Reliance Power chairman D V Kapur said most of the power projects sought to be promoted by IPPs were not taking off because of procedural hurdles.

He urged a complete removal of shackles in the power sector in order to bridge the increasing supply-demand gap.