Guidelines Issued For Minimum Farm Power Tariff

Minister of state for power S Venugo-palachari said the Centre had to take the initiative as the states were not inclined to take the responsibility for phasing out subsidies.

At the Economic Editors Conference here yesterday, the minister said the Centre had proposed two sets of power tariffs for the farm sector one for states which had already implemented the National Development Councils decision to charge the farm sector a minimum of 50 paise per unit and the other for states that had not implemented this decision.

The minister said fixing a minimum power tariff for the agriculture sector was one of reform measures in the power sector. The Centre will soon also announce a common minimum action plan for the next three to four years.

 

The plan, he said, would combine efforts to improve the plant load factor (PLF) of the existing plants, restructuring and revamping of SEBs and increased private participation.

In this connection, the minister reiterated the governments decision to bring in a bill in the winter session of Parliament to amend the Electricity Act to allow private sector participation in transmission and distribution also.

Conceding that only about 15,000 mw of fresh capacity would be finally created in the liquid fuel based power sector against the approval of 27,000 mw, the minister said states had been asked not to encourage any more liquid fuel based power projects without en-suring fuel lin-kages.

Power secretary P Abraham said states had been specifically told to proceed cautiously in sanctioning liquid fuel projects.

Some of the problems faced in the liquid fuel sector related to availability and cost of naphtha, identified as the thrust fuel in the existing liquid fuel policy.

Among the import options for various liquid fuels, naptha worked out to be costly. Further, naphtha is not being used for power generation anywhere in the world.

Therefore, the future thrust would be on the cheapest available fuel which was liquid natural gas (LNG), the minister indicated. But there were infrastructure problems as huge storage facilities had to be created for LNG, Abraham said.

Admitting that the eighth plan target of 30,500 mw for power generation would slip by 12,000 mw, the minister said capacity addition would pick up soon to bridge the shortfall.

He predicted that about 5,000 mw would be created in the next two years and capacity addition would be further speeded up to meet the ninth Plan target of 57,000 mw.

Venugopalachari said public and private sectors were expected to share the burden equally in creating this additional capacities. But because of the fund constraints, public sector would be able to add only a minimum of 10,000 mw and the private sector create about 25,000 mw.

On reports that Bhel was at the rough end of the private sector power policy, the minister said that on the contrary, Bhel had said that its order books were full of contracts.

If Bhel can participate in competitive bidding, they can get the projects, Abraham said rejecting suggestions that the private sector power policy discriminated against the state owned company.

Regarding the suggestion that the private sector power policy had not really taken off, the power minister said that when the policy was first announced, the foreign investors had shown greater interest in setting up power projects as compared to Indian entrepreneurs.

Though there was provision for 100 per cent foreign equity in setting up projects, most of the foreign investors had preferred to have Indian companies in their joint ventures.