Committee to review power sector finance

In a bid to rev up the country-wide transmission and distribution (T&D) network and look into financing issues, especially including power funding under priority sector lending, Prime Minister Manmohan Singh has approved setting up of the specially-designed Power Sector Standing Committee (PSSC), comprising power ministers of five states "" Orissa, Andhra Pradesh, Assam, Maharashtra and Uttar Pradesh.

The PSSC would also indicate broad policy measures and instruments for mobilising long-tenure finances for meeting investment requirements of the sector, particularly the hydroelectric projects.

The move is in conformity with the decision earlier taken at the chief ministers' conference on power sector on May 28, 2007. The first meeting of the PSSC is slated for September 24, 2007.

The PSSC would be functioning under the chairmanship of Union Minister for Power Sushil Kumar Shinde. A sub-committee of PSSC has also been set up under the chairmanship of the Planning Commission Deputy Chairman Montek Singh Ahluwalia.

Orissa State Energy Minister SN Patro said, "The prime minister has constituted a standing group of power ministers and five states have been included in the committee in the initial stages." The committee is proposed to be expanded in future.

The PSSC would basically focus on the constraints of the state power and private sector utilities and companies in securing funds. Of late, the power ministry has been receiving complaints of power utilities facing harrowing times in gathering funds for their proposed units in different states.

Patro said, "Many power utilities are talking of keeping their projects in abeyance confronted with shortage and sourcing of funds from different power financing organisations, banks and financial institutions." Orissa, in the past few months, has received 33 concrete proposals from different private and public power bodies.

According to Patro, "Most projects are over Rs 5,000 crore and they are expressing their helplessness in gathering funds. It is in this backdrop that the standing committee has been constituted to look into the power finance needs."

Apart from this, the committee would also go in for identifying specific needs of transmission, sub-transmission and distribution. The ministry has reports that while generation in many states has reached optimum levels, T&D network continues to suffer with the base customers deprived of electricity benefits.

According to conservative estimates, country-wide distribution network in most states takes up only 26-28 per cent of the power generated and transmitted. In this context, the newly-formed standing committee would play an important role in making the Rural Electrification Corporation (REC) become proactive in future.

The standing committee would also be re-defining exposure limits wherever necessary. The committee would be asked to assess the financial and technical viability of each project starting from ultra mega power to small and medium ones. The committee has also been empowered to instruct the power utilities wherever necessary to keep up to government norms.