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January 2006 - March 2006 Index
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COPY OF LETTER BY CMD, TRANSCO, A.P TO SECRETARY POWER, GOI |
Dear Shri Shahi,
The policy guidelines of Government of India for setting up of Mega Power Projects with incentives like exemption of customs duty; is a welcome feature in the direction of encouraging investments in generation by private/public sector.
In the Southern Region, we have Tamil Nadu already coming up with two joint venture projects (1000 MW each) with NTPC &NLC at Ennore and Tuticorin respectively. In the context of obtaining Mega power project status for these schemes, Tamil Nadu and NLC have been vigorously following up with MOP. Hopwever, the approval for such status is awaited.
While reviewing the progress relating to the above, in the 138th SRE Board meeting held at Chennai on 30th August, 2005, the constituents noted during the discussions that as per the Notification of Government of India the following are among the conditions required to be fulfilled in order to obtain mega power project status:
I. The power purchasing State has constituted the Regulatory Commission with full powers to fix the tariff.
II. The power purchasing state undertakes, in principle, to privatise distribution in all cities in that Sates, each of which having a population of more than one Million, within a period to be fixed by the Ministry of Power.
The beneficiary constituents of Southern Region noted that the condition regarding privatisation of distribution, a precondition for grant of Mega project status, was greatly hampering new capacity additions and as such, there was a dire need for de-linking the issue of generating capacity addition from privatisation issues, lest it act as a disincentive to investors. Accordingly, The Board resolved that generation capacity addition was a separate issue and was not to be linked with privatisation of the distribution segment.
The rationale behind the linking of generation capacity addition with privatisation is not understood, as it will not serve the intended reform purpose of quick mega capacity additions. On the contrary, it only impedes generation addition. Further, it must be pointed out that the objective of power sector reform is not privatisation, but reliable power supply at affordable costs for all categories of consumers. This objective can be achieved through the public or private sector, as the case may be.
As per the draft National Electricity Plan released by CEA in February 2005, the capacity additions planned for the Southern Region during the 11th Plan are to the tune of 9038 MW, including 1000 MW capacity (with 1 unit of 500 MW each) from NLC &NTPC [1]of TNEB planned in the 11th plan period.
Past experience shows that capacity additions, although meticulously planned, do have large numbers of associated issues that introduce time and cost over-runs. Under the circumstances, it would only be prudent to expedite decision on issues like accordance of Mega project status for the projects on hand, and not to let project on hand slip on account of avoidable restrictions. Recalling the resolution passed by the SR beneficiary constituents, I request that privatisation of distribution should immediately be removed as a precondition for accordance of Mega project status and clearance of NLC &NTPC joint ventures of TNEB at Tuticorin & Ennore respectively be accorded on priority.
I am sure, this issue will receive your immediate attention considering the impending possibilities of a widening gap between demand and supply. The requirement for early accordance of Mega project status to projects is further corroborated by the fact that the Government at the Centre is committed to ensuring realisation of 100,000 MW thermal & 50,000 MW hydro capacity and of power for all by 2012.
With regards, Yours sincerely,
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