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 Since
independence, specially, over the last decade, with
rapid industrialisation and increasing domestic consumption,
the demand for power has increased manifolds. The increasing
demand for power has made it necessary for the government
to initiate reforms in its policies to attract private
investments and introduce competition in the power sector.
Monetary restraints and the necessity to provide better
service to the people has made it mandatory to attract
private investment in the power sector. In fact, it
was evident by the beginning of the Eighth plan that
the government could no longer finance the increasing
capacity requirements of the power sector.
However, privatisation called for dramatic change in
the state of affair of the power sector. The first initiative
in this regard was taken in October 1991, when the power
policy was amended. The new legislation allowed private
investors to set up generating stations that would supply
power in bulk.
This step not only created tremendous investment opportunities
but also allowed private companies to provide power
directly to consumers.
The government has also permitted the private sector
to set up diesel generating units and use heavy fuel
oils as primary fuels. The government is also thinking
of removing the 16 per cent cap on the rate of returns
for the power companies. Instead the power companies
would have to compete with each other for the tariffs.
This would definitely benefit most of the private sector
companies like Tata Electric Company, BSES and GIPCL.
So far, reform and restructuring measures introduced
in India include setting up of a regulatory body, dividing
the sector into generation, transmission and distribution
sub categories and setting up of a frame work to break
these up into smaller entities to facilitate the entry
of private capital.
The Government has also simplified procedures for clearances
of projects. Administrative clearance has been an impediment
in the implementation of the project. Steps are being
taken remove such bottlenecks in order to expedite project
completion.
The process of liberalisation, the new power policies
as well as the participation of the private sector have
entirely reshaped the power industry in the country.
Source:
Swagath Magazine
www.nic.in
www.ntpc.co.in
Picture Courtesy: Swagat, August 2001
- Shravanti Choudhuri
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