Inter-ministerial committee reaches consensus on all contentious issues.
There is good news for electricity consumers in India. The power ministry has managed to evolve a consensus on the contentious issues that have so far plagued attempts at opening up the power market in India through open access. Open access allows large users of power — typically consuming 1 megawatt (Mw) and above — to choose their electricity supplier.
“An agreement on all the issues has been reached. The draft report being prepared by the high-level committee on open access will be finalised by the end of this month. A cabinet note incorporating the recommendations will then be sent by the power ministry,” Planning Commission member B K Chaturvedi told Business Standard.
Chaturvedi is heading the inter-ministerial committee finalising the blueprint for implementing the open access scheme.
A major issue on which the fate of open access has been hanging fire is whether or not to make it mandatory for a certain portion of the Centre’s unallocated quota of power to be sold through open access. This was a recommendation of an earlier task force on open access headed, again, by Chaturvedi.
The members of the task force included former finance secretary and now Reserve Bank of India Governor D Subba Rao, former power secretary Anil Razdan, principal adviser to deputy chairman of planning commission Gajendra Haldea and former CEA chairman Rakesh Nath.
The proposal was opposed by the power ministry fearing loss of its control over allocations.
The ministry has discretion in the allocation of 15 per cent of the overall 300 billion units of power produced by central generating stations annually. This quantum of unallocated power is generally used by the government to bridge the gap of demand and supply in times when a state is reeling under huge deficits of electricity.
The dispute had reached the Prime Minister’s Office (PMO) which had asked the Union cabinet to take a call.
An earlier cabinet note on the issue was withdrawn to give more teeth to its proposals and incorporate the power ministry’s reservations. A senior official close to the development informed that the ministry has agreed on the contentious proposal of the task force, enabling forwarding the proposal to the Cabinet. If the Cabinet accepts the proposal, roughly 75 BUs of power will be available for sale through open access annually.
The Electricity Act of 2003 had assigned a deadline of January, 2009 for grant of open access to all consumers with electricity requirement of above 1 Mw. Applications seeking open access for over 25,800 Mw have been submitted till date in the country. Actual implementation has, however, been as low as 7,300 Mw, and that too largely for captive power, according to latest data obtained from Central Electricity Regulatory Commission (CERC).
While a senior power ministry official declined comment on the matter, former power secretary Anil Razdan said setting aside some power for sale through open access is not a solution to the problem.
“The unallocated quota is meant for emergency situations of shortage in a state. It is not sufficient to meet even the existing shortages of power. If we take away more power (from the quota), we are causing more hardships in availability,” he said.
In the long-term, solution for the delayed open access has to come from state regulators who should fix adequate tariffs without succumbing to political pressures, he said.
