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Built-in time lag shocks power reforms

New Delhi, June 11: The brave new world where you will have the option to choose your electricity supplier — just the way you can cherry-pick your cellular service provider today — is still a long way off.

It’s all there on paper of course: the Electricity Act 2003 — which sets the groundwork for large-scale power sector reforms — has been passed by Parliament and been notified by the government. It came into effect on Tuesday.

The harsh reality is that it could take up to three to five years before electricity consumers start deriving the full benefits from the new legislation.

Blame it on the process of issuing the necessary rules and regulations by the regulatory authority — Central Electricity Regulatory Commission — to turbo-charge the power sector reforms.

CERC has already set target dates for coming out with the relevant terms and conditions governing power tariff setting, and the guidelines for power trading and open access, grid code, power regulation, and availability-based tariff.

CERC chairman A. K. Basu says, “The terms and conditions for tariff will be notified by March 31 next year and will be effective from April 1. Guidelines for power trading and open access will be issued by September 30, 2003. ABT, grid code and power regulation issues will be modified and issued by March 31, 2004.”

That isn’t all. There are still a few kinks in the legislation that have to be cleared up.

Says power secretary R. V. Shahi: “The government will bring the necessary amendments to the Act in the next session of Parliament. Issues like setting up of an appellate tribunal and the need for techno economic clearance for hydro power generation will be addressed in addition to other aspects that are essential to make the reforms in the sector effective.”

Other problems relate to the pressing need to ramp up power generation in the country. There have been charges that the Central Electricity Authority (CEA) has been dawdling over clearances for power projects. “So, we have requested the power ministry to set up a special team to address issues that are brought before us,” says Basu.

The upshot of all this, says a senior power ministry official, is that it will take a minimum of 3-5 years before the Act comes into effect for all — consumers and power companies.

Shahi, who was speaking at a seminar organised by the Confederation of Indian Industry (CII) to discuss the Electricity Act here today, also indicated that the benefits would not be immediately visible.

The Act allows a group of consumers to come together as bulk users and choose to buy electricity directly from generating company or from intermediaries.

“The Act offers incentives for rural areas. There is a big business opportunity for industry to electrify rural areas without obtaining any licence and this should be exploited,” said Shahi.

The Electricity Act also provides for drafting National Electricity Policy, National Electricity Tariff Policy, and Rural Electricity Policy.

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