MISSION 2012 : POWER FOR ALL

R.V.Shahi*

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Power plays a vital role in all economic activities leading to a better quality of life. The Ministry of Power has set a goal to provide "Power for all" by 2012.

A comprehensive blueprint for power sector development has been prepared encompassing an integrated strategy for its development with many significant objectives. These include - sufficient power to achieve a GDP growth rate of 8 per cent, reliable and quality power at optimum cost while ensuring commercial viability of power industry and availability of power for all.

To achieve these objectives, the Ministry has come up with an integrated power sector development plan with focused areas of action. The Power Generation strategy focuses on low cost generation, optimization of capacity utilization and fuel mix, controlling the input cost, technology upgradation and utilization of non-conventional energy sources. The transmission strategy gives a thrust on development of the national grid including inter-State connections, technology upgradation and optimization of transmission cost. The distribution strategy is meant to achieve distribution reforms. The focus is on system upgradation, loss reduction, theft control, consumer service orientation, quality power supply, commercialization, decentralized distribution generation and supply for rural areas.

The regulation strategy is aimed at protecting consumer interests and making the sector commercially viable while financing strategy helps generate resources for the required growth of the power sector. To optimise the utilization of electricity the conservation strategy focuses on the demand side and load management. The technology upgradation is intended to provide energy efficient equipment and gadgets.

The Last but not the least, is the communication strategy to strive for political consensus with media support to enhance the general public awareness.

Accelerated Performance

During the last five years the accelerated performance has been substantial and noteworthy. The enhanced electricity generation performance during the current five year block period is 2474 billion units (BUs) compared to 1871 BUs during the previous block. The yearly generation before the five-year block of 421 BUs has improved to 531 BUs the average yearly growth rate being more than 5 per cent while the generation from Central stations has improved by more than 6 per cent.

The plant load factor (PLF) of thermal stations in the country has increased from 64.4per cent in 1996-97 to 72.1 per cent in 2002-03 and that of Central sector stations from 71.1per cent to 77.1per cent during the corresponding period.

The average yearly capacity addition has increased from 3,150 MW during the last five-year block to about 3,750 MW during the current block.

A capacity of about 1,00,000 MW is planned to be set up in the next two Plan periods. Out of this 41,110 MW has already been targeted for the Tenth Plan period. The outlay on power sector during the Tenth Plan period has been enhanced to Rs. 1,43,399 crore with an increase of approximately 214 per cent over the Ninth Plan outlay of Rs. 45,591crore. The advance action plan has already been initiated for a capacity identified for addition in the Eleventh Plan. The monitoring mechanism has also been further strengthened with a system of monthly and quarterly reviews by the Chairman, Central Electricity Authority (CEA) and Secretary (Power).

Hydro development in the country needs priority attention considering the present hydro thermal mix of 25:75 while the ideal mix is 40:60. With an unharnessed estimated hydro potential of more than 150,000 MW the Ministry of Power has initiated a programme for accelerated and planned hydro development after an overall assessment and prioritization. A new policy has been introduced to increase the hydel capacity to meet the peaking demand. It lays down the mechanism for increasing investment in this sector to harness the untapped hydel potential. The CEA has identified 399 hydro schemes with an aggregate capacity of 107,000 MW which are yet to be developed. The study has been conducted for six major river systems basin-wise and the projects categorized as A, B and C in order of their importance. Out of these projects, the Ministry of Power in consultation with the CEA has identified 162 projects spread across 16 States with an aggregate capacity of 50,560 MW. Development of these projects would start with the preparation of feasibility studies to be undertaken by 7 agencies such as NHPC, WAPCOS, NEEPCO and State utilities. Besides,a three-stage clearance procedure has also been adopted for speedy implementation of the Central sector schemes. More than 20,000 MW of hydro schemes are under stage I & II development.

The Captive Power Development policy has already been circulated to all the States and UTs. In fresh capacity approvals, the CEA has accorded techno economic clearance to more than 38,000 MW of generating projects and 11,000 km of transmission schemes during the period.

In the Central Sector 6,695 MW of generation projects costing Rs. 29,915 crore and transmission schemes of Rs. 11,692 core have been approved during the last five years.

The Ministry of Power has planned to set up a national grid by 2012 which would economise the use of resources and simultaneously help in inter regional transfer of 30,000 MW power from the surplus to deficit areas. The inter-regional transfer capacity has now gone up to 8000 MW.

Private participation is also being encouraged through joint ventures in implementing the progamme.

A Consistent improvement in performance has been seen in undertakings under the Ministry of Power. The net profits appreciated on an average by 16.5 per cent annually while the turnover increased by 14.5 per cent average annually between 1997-98 and
2002-03.

Legislative Initiatives

The Electricity Regulatory Commission Act, 1998 fulfills the commitment of providing statutory bodies like the Central Electricity Regulatory Commission (CERC) and the States Electricity Regulatory Commissions (SERCs) to rationalise electricity tariff and transparent policies regarding subsidies for regulation of inter-State transmission of energy and promotion of efficiency and environmentally benign policies. The CERC has been set up by Central Government and many States have also initiated action to set up their regulatory mechanisms.

The Electricity Act, 2003 has been enacted in June’03. The Act covers features on National Electricity Policy, rural electrification, open access in transmission, mandatory SERCs, license-free generation and distribution, subsidy to be phased out and if so to be paid through budget, free power trading, mandatory metering and stringent penalties for theft of electricity.

The Energy Conservation Act, 2001 primarily ensures energy efficiency in consumption and, consequently, the Demand Side Management (DSM) for reducing the need for installing new capacity. The Bureau of Energy Efficiency (BEE) has been set up for formulating norms for processes, consumption standards, testing, certification and labelling procedures. The Act facilitates the State government to enforce an efficient use of energy and its conservation. It also stipulates penalties and adjudication. Besides, it has prepared an Action Plan for implementation of Energy Conservation Act. Besides, it has also undertaken energy audit of government buildings to reduce consumption in major offices in New Delhi.

As transmission was not a separate activity under the electricity laws, there was inadequate investment in this sector. Through the Electricity Laws (Amendment) Act, 1998, the lacuna has been removed and the way paved for facilitating more investment in the transmission sector as well as a coordinated operation of the grid system. Guidelines were issued for private sector participation in the transmission sector.

Major Achievements

During the last five years a thrust has been given to simplify the procedures in order to facilitate major achievements in the power sector. These include removing of Rs. 1500 crore ceiling for foreign equity, forming of Crisis Resolution Group to resolve last-mile problems in projects developed by private promoters and three-stage clearance procedure adopted for speedy implementation of the central sector hydro power schemes. Besides, more autonomy has been given to the PSUs and Electricty Boards to handle their commercial operations.

To deliberate on the critical issues and to enlist support and optimise investment in the power sector from foreign and domestic investors, five international conferences-cum-business meets were held through CII, FICCI and CPSUs of the power sector during 2001-02.

Political consensus was evolved in the Chief Ministers’ / Power Ministers’ Conference held in March, 2001 wherein it was resolved to pursue reform measures expeditiously. States have also committed to undertake reforms in a time-bound manner. Madhya Pradesh, Punjab and Tamil Nadu have abolished the age-old practice of free electricity to agriculture.

For restoration of financial viability of the State utilities, their outstanding dues payable to CPSUs - amounting to more than Rs. 41,000 crore have been securitised as part of one-time settlement. This would restore the credit-worthiness of State power utilities. Besides, tripartite agreements have also been signed by 24 States while 8 others have agreed in principle. State power utilities have worked out a commercial turn-around plan. Its results are already visible in some States.

The sub transmission and distribution system in the country needs to be overhauled to reduce the unacceptably high transmission and distribution losses. A turn-around in distribution is being attempted through independent tariff determination, 100 per cent metering, elimination of theft, energy audit and privatisation where reforms otherwise are not feasible. An Accelerated Power Development & Reforms Programme (APDRP) has been initiated to provide financial assistance to the States for strengthening transmission and distribution networks.

About 70,000 villages in the country are still unelectrified. Out of them 18,000 are situated in remote and inaccessible areas. Complete village electrification has been sought by the end of the Tenth Plan with full household coverage by the end of the Ninth Plan. A Rural Electricity Supply Technology Mission has been constituted with emphasis on decentralized distributed generation for electrification of the rural areas.

An Action plan has been formulated for harnessing the power potential and improving transmission and distribution as per the package announced by the Prime Minister for the socio- economic development of North Eastern Region and Sikkim.

In view of the safe-environment-specific programmes, a Special Purpose Vehicle (SPV) has been set up to effect afforestation to facilitate expeditious clearance from the Ministry of Environment and Forest for new projects.

A National perspective plan for Research & Development for next fifteen years and National Training Policy for power sector have also been drawn up. (PIB Features)

*Secretary, Ministry of Power