According to the APP, whose members include Adani Power, Essar, Tata Power, PTC India and Vedanta, power plants have experienced huge coal shortages, necessitating imports and purchase from auction platforms.
Confident of meeting ’24X7 Power for All’ target by March, the government wants to take forward its reform agenda for the power sector in 2019 including by providing consumers options to change their service provider even as the industry wants immediate steps to ease the “pains” relating to coal shortage, financial stress and high pricing. After 100 per cent household electrification under the government’s ambitious ‘Saubhagya’ scheme, the next big policy move for the sector could be the proposed electricity amendment bill that provides for separation of carriage and content business. This would help consumers to change their service providers for electricity supply, just like they do for the telecom and other services. Under the Rs 16,320 crore Saubhagya scheme, the government has already provided electricity connections to 2.2 crore families and expects to complete the task of connecting the remaining 78 lakh households latest by February 2019. “The last one year has been momentous for power sector in the country. Electricity reached every village this April and we are on the verge of electrifying every household. The whole world is looking at India’s electrification journey with admiration,” Power Minister R K Singh told PTI.
“Now we have set ourselves on the path of ’24X7 Power for All’ by March 31, 2019 and the government is committed to take every step to achieve this through expansion and strengthening of infrastructure for power generation, transmission & distribution as also putting in place a robust regulatory framework in terms of amendments to Electricity Act and Tariff Policy,” he said. The industry players, however, also wants an urgent attention on possible measures from the government side on tackling various stress points for the sector, including those regarding their financial viability. Association of Power Producers (APP) Director General Ashok Khurana said 2018 has been a painful year with some positives for the power sector.
He said rise in power demand across states due to accelerated household electrification under the Saubhagya scheme and a pick-up in economic activity augurs well for the stranded and under-utilised power assets. Despite many infirmities, the new coal allocation framework, ‘Shakti’, has helped 9 GW of operational capacity having power purchase agreement access coal, he added. A High-Level Empowered Committee (HLEC) constituted under the court directions has recommended review of certain flawed provisions of Shakti, he said, while hoping that the government would act fast on the recommendations and make coal allocation framework more equitable and ownership-neutral.
According to the APP, whose members include Adani Power, Essar, Tata Power, PTC India and Vedanta, power plants have experienced huge coal shortages, necessitating imports and purchase from auction platforms, thus increasing the price of power despite rise in coal production. The industry body pointed out that adequate availability of coal is a must to achieve the “reliable and quality power supply to all” round the clock. It suggested opening the coal mining sector to competition and appointing a coal regulator to bring in transparency and commercial discipline. On financial stress of the sector, Khurana said, “RBI’s ill-conceived circular of February 12, prescribing stringent definition of default and impractical timelines without taking into account the sector-specific genuine difficulties and that its application in present form will neither help banks nor sector at large”.
He said this was “a fact acknowledged by government and judiciary” and the RBI’s move came as “a rude shock to owners whose assets were stressed for reasons outside their control. “It was like being punished for fault of someone else,” he said, while asserting that the circular, supposedly meant for resolving stressed assets, was actually an enabler of liquidation or change in ownership. The matter is currently in the Supreme Court, Khurana said, while adding that a status quo ordered by the court gives the government a window to implement the recommendations of the HLEC.
“A quick action on three most critical stress points — advisory for cost pass-through of deficit coal to meet normative availability, pending since April 2017 because of inter ministerial differences; setting up an institutional mechanism to ensure timely payment (current backlog is Rs 37, 000 crore) and bringing bids for another 2500 MW with linkages by PTC, would help to save about 15 to 17 GW of generation capacity from liquidation,” he said. Khurana expressed hope that the the HLEC recommendations, submitted last month, would get operationalised by this year-end or by beginning of 2019 to put the sector back on a sustainable growth path in the new year. A power sector expert said fast-tracking implementation of the HLEC recommendations would help the sector get out of stress.
Besides the government would also have to bring Rs 16,000 crore hydro policy and take step to run about 14GW of gas-based capacity which is starving for fuel. Earlier government had given subsidy under power system development fund to gas-based plants to buy expensive imported gas, the expert said. According to Power Ministry, major reform initiatives being taken up include addressing various issues being faced by electricity sector through draft amendments proposed in Electricity Act 2003 and Tariff Policy, 2016. According to power ministry data, India has emerged as a net exporter of electricity this year, while the energy deficit has come down and the energy availability has gone up.