Govt rules out spot market for power trading

New Delhi, Dec 6: The government on Thursday ruled out creation of a spot market for power trading, saying the country’s economy is not yet ripe for such experiments.

“Reforms should not be inspired from outside experience. Introduction of spot market will put power market in spot,” power minister Suresh Prabhu said at the 74th annual session of Ficci here.

Without making a direct reference to fall of energy trader Enron Corp which became a victim of deregulation of spot power trading market, Mr Prabhu said, “Reforms should look at ground realities.”

Spelling out the government agenda for power sector reforms, he said the proposed electricity Bill 2001 will delicense generation and make it mandatory on 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,” Mr Prabhu said while pointing out that at present the average tariff worked out to be Rs 2 per unit as against average cost of power supply of Rs 3 per unit. While all power supplied would be metered, subsidies would be provided directly from the state budgets, he said.

“The present cross-subsidisation has ensured that cost of input for industry remains very high. Industry tariff of 7-8 cents per kwh was very high compared to global norm of 2-3 cents per unit,” the minister added.

— PTI