DRAFT
NATIONAL POLICY PROPOSES DUTY CUTS FOR EQUIPMENT AND FUEL
- NEW RULES FOR DISTRIBUTION LICENSE
The government intends to put in place rules
for granting second and subsequent power distribution licenses. The draft
National Electricity policy, circulated by the power ministry earlier this
month, has proposed duty cuts for equipment and fuel by the centre and states to
attract high – investment. The new rules will be notified shortly.
It has also proposed a greater internal
resource mobilisation by public sector companies to meet the estimated
investment target of Rs. 900, 000 crore over the next ten years.
The paper has suggested that the second
license holder should get an area, which is at least the size of a revenue
district – it could be a municipal council for a smaller urban area and
municipal corporation for a larger urban area – to make the operations
economically viable.
“Open access in distribution on a significant
scale will be feasible, when the distribution network is at an adequate level of
efficiency. The state regulatory commissions will need to augmentation of the
network is undertaken by the distribution licensees within a mandated timeframe,
“the draft paper said.
It also said cross subsidies need to be
further reexamined after five years in the light of their sustainability. Though
the government has not sought a ban on subsidies, it is of the opinion that
states need budgets for the subsidies, so that the health of the utilities does
not suffer.
To meet demands, estimated at 975,222 million
units and peak demand of 157,107 mega watt by 2012, the draft has proposed
addition to the overall availability of installed capacity to 85 per cent and a
spinning reverse of 5 per cent to ensure grid security and reliable supply.
For promotion of hydro-electricity, the power
ministry has sought a long tenor debt financing. Imported coal-based thermal
stations in coastal areas would be encouraged, based on the economic viability.
For gas-based units, new capacity will come up based on indigenous gas findings.
In case of transmission, the draft policy
sought a tariff mechanism, which is sensitive to distance, direction and related
to quantum of flow. The paper has also laid emphasis on rural electrification
for which a new model has been discussed.
Power points
-
New norms likely soon for
granting second and subsequent power distribution licences.
-
Proposes greater internal
resource mobilisation by PSUs to meet Rs 900,000crore investment target over
the next ten years
-
Cross-subsidies need to be
further re-examined after five years in the light of their sustainability.
(Courtesy: Business standard 26.7.04)
