Union power minister Suresh Prabhu today said the government should strike a balance between increased investments in the infrastructure sector and the country's long-term economic security.
Prabhu, who was addressing a panel discussion at the 74th annual session of the Federation of Indian Chambers of Commerce and Industry (Ficci) here today, pointing to the crisis in the Argentinean economy said, "Even as we develop infrastructure by borrowing more, we should keep our economic security in mind. A trade-off between maintaining economic security and short-term benefits is important in today's context."
In order to ensure security on the power front, the minister said the country needs to lower its reliance on imported fuel -- mostly liquefied natural gas (LNG) -- for power generation and rely more on renewable sources available in the country.
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Even though the country's coal reserves are set to last for a sufficient time period, there is a need to explore other alternate modes of generation during capacity addition measures, which are sustainable in the long run, he said.
On the government's agenda for power sector reforms, he said the proposed Electricity Bill 2001 will delicense generation and make it mandatory for the state governments to set up regulatory commissions with a mandate to pass rational tariff orders.
"Tariff orders by state electricity regulatory commissions will help reduce subsidies for the undesired sectors and put in place a rational tariff structure in the country," Prabhu said, while pointing out that at present the average tariff worked out to be Rs 2 per unit as against the average cost of power supply of Rs 3 per unit.
While all power supplied will be metered, subsidies will be provided directly from the state budgets, he said. "The present cross-subsidisation has ensured that the cost of input for industry remains very high. The industry tariff of 7-8 cents per Kwh is very high compared to the global norm of 2-3 cents per unit," Prabhu added.
Prabhu said power reforms also include revamping of distribution network. At present, power theft accounts for Rs 20,000 crore losses to state electricity boards.
To make SEBs commercially viable, over Rs 41,000 crore dues owed by them to central utilities are being taken off their balancesheet. All state governments will issue bonds for the outstanding amount to the central utilities, he said. New accounting norms are also in the offing for SEBs, which are being worked out with the Institute of Chartered Accountants of India, he said.