Thursday, October 26, 2006

Powering India to economic prosperity

Power is growing at the rate of 6-7% currently. There is an 8% deficit and 12% peaking deficit facing the country. To bridge this gap, it would require an investment of about $20 bn per annum. Only an integrated economic view of the power value chain from fuel supply to the consumer is essential to attract private capital and ensure the viability of the power sector.

A five point strategy suggested by experts includes:

  1. Securing payment to private generators.
  2. Effectively implementing Electricity Act, 2003. Unbundling, removing cross-subsidies through tariff rationalization, effective implementation of open access regime are found slipping up.
  3. Establishing power exchange: This will go a long way in making peaking plants viable. They can survive only if they are allowed tariffs at least twice as high as those of the base load plants. The PX will essentially work as a day ahead spot market.
  4. Partial or complete privatization of DISCOMs: Delhi’s privatization has given hope.
  5. Enhancing fuel availability: Both coal and natural gas.