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January 2006 - March 2006 Index
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Copy of Letter by A.K. Kutty, Jt. Secretary, GOI to Chairman, KSEB |
D.O.NO.A-118/2003-IPC(Vol.II) NEW DELHI 13th February, 2006
Dear Shri Manoharan,
Kindly refer to your D.O. letter No. CP/Bd/1121-gnl/2005 dated 24.12.05 addressed to Secretary (Power) regarding the policy guidelines of Government for setting up mega power projects wherein it has been suggested for removal of one of the pre-conditions calling upon the power purchasing states to undertake, in principle, to privatise distribution in all cities, in that state having a population of more than one million within a period to be fixed by the Ministry of Power.
2. In this context, it may be mentioned that the above condition alongwith other stipulations under the present policy for the mega power projects have been included to encourage investments in the power sector by the financial institutions/banks who were earlier way of funding power projects due to poor financial condition of the State Electricity Boards and their inability to provide adequate payment security mechanism. The response to the Government’s energy policy has been encouraging. Lately, encouraged by the process of reforms, 13 private sector projects of capacity of 4927 MW have achieved financial closure and another 10 private power projects (mostly mega projects) aggregating to a capacity of a 11432 MW are nearing financial closure.
3. In view of the above, you would appreciate that the pre-condition of calling upon the State Government to undertake to privatise distribution in cities having population of more than one million, was approved by the Cabinet keeping in mind the concerns of the FIs and project developers who desire a suitable and financially viable distribution system for payment security. Thus, at this stage the mega power policy does not envisage any dilution of the said condition.
Regards,
Yours sincerely,
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