Electricity came to India over a century ago when a small power plant was set up in Calcutta in 1888. By the turn of the century, a hydroelectric project was set up in Darjeeling in West Bengal. At the time of Independence installed capacity was as low as 1362 MW and that too around urban areas, with power generation of 4.1 Billion Units Power generation programmes made phenomenal progress with the advent of Five Year Plans. Today installed capacity is nearly 98,000 MW and the power generation stands at 481 BU. In the last seven years from 1993 to 2000, generation capacity of 25507 MW was added. Capacity addition expected in 2000-2001 is about 4000 MW.

    Power is a concurrent subject under the Constitution and the responsibility for development of this sector lies with both the Central and State Governments. Major legislations in the sector includes the Electricity Supply Act, 1948, Indian Electricity Act, 1910 and Electricity Regulatory Commission Act, 1998.

    The overall power generation by Utilities in the country has increased from 287 BU during 1991-92 to 481 BU during 1999-2000. The power generation in India is predominantly coal based. The share of the thermal power in the total power generation is about 80.4% followed by hydro (16.8%) and nuclear (2.8%). The share of nuclear power in the total electricity generation is as high as 76 per cent in France, 33% in Japan , 30% in Germany, 25% in U.K. and 22% in USA, while it is less than 3 per cent in India.

    The installed capacity in Utilities also has witnessed a constant addition every year. It increased from 66,086 MW in 1991 to 97836.88 MW in 2000.

    The Plant Load Factor (PLF), an indicator of generating performance of thermal stations, has also increased steadily. It rose from 57.1% in 1992-93 to 67.3% in 1999-2000. The target for 2000-2001 is 66 .7%.

    The Transmission and Distribution losses are on the high side. Through concerted efforts, the transmission and distribution losses for the country have declined from 24.53% in 1996-97 to 24.44% in 1997-98.

    In spite of significant growth in power generation the shortage remains. In general, there is 12.4 per cent shortage in peak demand and 6.2 per cent in terms of energy during the year 1999-2000. The annual peak demand is likely to go up to 1,76,000 MW by 2011-12.

    As on 31.3.2000, about 51 per cent of the total installed capacity is with the State Electricity Boards (SEBs). Commercial losses of State Electricity Boards (without subsidy) have shot up from Rs. 29.52 billion in 1992-93 to nearly Rs. 75.86 billion in 1996-97. Restoration of financial health of SEBs and improvement in their operational performance continues to remain the most crucial issue in the power sector. SEBs are required to earn a minimum rate of return (ROR) of 3 per cent of their net fixed assets in service, after providing for depreciation and interest charges. However, only a few SEBs have ROR of more than 3 per cent.

    The Central Electricity Authority (CEA) constituted under the Electricity Supply Act, 1948, advises the Government on technical and economic matters. The construction and operation of generation and transmission projects in the Central Sector are entrusted to Central Sector Power Corporations- National Thermal Power corporation (NTPC), the National Hydro-electric Power Corporation (NHPC), the North Eastern Electric Power Corporation (NEEPCO), and the Power Grid Corporation of India Ltd. (PGCIL).

    The public sector NTPC, with 13 coal based and 7 gas/liquid fuel based power projects, is the sixth largest thermal generator in the world and the largest producer of power in India. The Corporation with total investment of Rs. 450 billion generated 118 billion units of power, about one fourth of the total generation in the country in 1999-2000. The total turnover of NTPC was Rs.165 billion and profits Rs. 34 billion in 1999-2000.

    The Union government in 1980 approved in principle the establishment of a Centrally owned and operated national power grid. The national grid would eventually comprise strong regional networks with suitable HVDC links between the regions. The inter-regional power transfer capacity today has been raised to 4350 MW from a mere 500 MW in 1992-93. The inter-regional HVDC back to back links Vindhyachal (2X250 MW) connecting Western and Northern regions, Bhadrawati (2X500 MW) connecting Western and Southern Region, Gazuwaka (1X500 MW) connecting Eastern and Southern Region are in operation. These as well as the other AC links between regions form the important components of the National Power Grid. The basic framework of the Power Grid shall be in place after completion of ongoing East-North Sasaram HVDC inter-connection scheduled for completion by 2002. The power transfer capacity is also planned to be enhanced in a progressive manner upto 14000 MW by 2004-05 and upto 30,000 MW by the year 2012 through establishment of various inter-regional AC and HVDC links along with transmission highways planned for future. The Power Grid Corporation of India Limited established in 1989 has been vested with the responsibility of developing the National Grid.

    In 1947, only 1500 villages in the country were electrified. Now under the rural electrification programme 5,06,401 (86.2%) villages out of the total 587258 villages have been electrified. Similarly, a total of 1,24,45,010 million pumpsets have been energised upto February, 2000 out of the total estimated potential of energisation of 19.6 million pumpsets thus achieving 63% of energisation target for pumpsets. The Government launched Kutir Jyoti Programme on the occasion of Nehru Centenary Year (1988-89) for extending single point connection to the households of rural poor families below poverty lines. This programme is also being given priority in the rural electrification schemes.

    The per capita consumption of electricity has considerably improved since independence.

    Government has permitted setting up of power projects based on heavy fuel oil such as Naptha, Heavy Petroleum Stock (NHPS), Low Sulphur Heavy Stock (LSHS), Heavy Furnace Oil (HFO), Furnace oil , natural gas, Petroleum Coke and Vacuum Residue Condensate and Orimulsion. HSD (Diesel) is normally not permitted. A ceiling of around 12000 MW on capacity addition from naptha based power projectshas been prescribed.

    The response to Government of India's policy has been encouraging. Since 1991, both domestic and foreign developers have evinced keen interest in the Indian power sector. Altogether 95 private projects amounting to 54967 MW of installed generation capacity are presently being monitored by the Central Government. In addition there are several projects which are being set up in the private sector with the approval of the State governments themselves and do not require the Techno- Economic Clearance (TEC)of Central Electricity Authority (CEA). So far, 57 private sector power projects amounting to around 29375.5 MW have been given TEC by CEA.

    As per available information, 24 private sector power generation projects (including those which do not require TEC of CEA) having a total capacity of 5058 MW have so far been commissioned. Apart from this 17 projects (including those which do not require TEC of CEA) with a total capacity of around 5096 MW are under construction.

    The Electricity Regulatory Commission Act, 1998 provides for the establishment of a Central Electricity Regulatory Commission and State Electricity Regulatory Commissions with the objectives of rationalisation of electricity tariff, transparent policies regarding subsidies, promotion of efficient and environmentally benign policies and for matters connected therewith or incidental thereto. Accordingly, the Central Electricity Regulatory Commission was set up with effect from 28.7.1998 and the same has become functional. Arunachal Pradesh, Madhya Pradesh, Delhi, West Bengal, Tamil Nadu, Gujarat, Andhra Pradesh, Uttar Pradesh, Orissa, Haryana, Punjab, Maharashtra, Karnataka and Rajasthan have constituted/ notified constitution of State Electricity Regulatory Commissions.

    The Government of India had announced a policy on Hydro Power Development, incorporating several steps and measures in August, 1998, in order to accelerate the pace of Hydro Power development in the country. The aims of the Policy are mainly to initiate measures to check the declining trend in hydro share in overall energy generation and to exploit the vast hydro-electric potential in the country especially in the North and North-Eastern Regions.

    In November, 1998 the Government accorded approval to the revised Policy on Mega Power Plants. The objectives of this policy are : Develop mega sources of power, utilising economies of scale with less efforts on project development and obtain lower tariffs; Produce power at the most economical location and transmit the power to locations where demand exists. Projects are to be set up both in public and private sector with free import of capital equipment. For domestic bidders price preference, deemed export benefits would be given. States would be advised to exempt supplies made to mega power plants from sales tax and local levies. Income tax holiday regime would be continued with the provision that the tax holiday can be claimed by a promoter in any block of ten years, as possible, while obtaining tariff offers. A Power Trading Company has been established which would purchase power from the private power projects and sell these to the identified State Electricity Boards.

INSTALLED CAPACITY (MW) AND GENERATION (IN BRACKETS) IN BU