Prime Minister Manmohan Singh ruling out a uniform power policy is good news at one level but at another, it makes it all the more difficult for the Centre to frame broad guidelines for states.Electricity being on the Concurrent List, the Centre and states have an important role to play in evolving an appropriate mix of policy measures that can be suitably adopted by individual states.The Centre cannot leave power reforms at the doorsteps of state governments.For instance, setting up regulatory commissions in the late 1990s was seen as a remedy for the sector’s ills—but our peak power shortage is still on the rise and so are losses of the state electricity boards.There are five issues that need urgent attention where the Centre has a critical role to play:• Remove scope for any populist schemes by suitably amending the Electricity Act. In its present form, the Act gives ample freedom to political parties to announce such schemes by making suitable provisions in the state budget. The Act should also take into account the financial position of states.• The Centre needs to pay urgent attention to acute shortage of fuel for the sector. States like Gujarat and Andhra Pradesh are or would be paying for capacity—called fixed charges or capacity charge—that cannot generate any power due to lack of fuel. While imported coal is an option, supply of domestic coal needs to be increased. The Railways and the Coal Ministry have to treat supply to power stations (be it state owned, private or that of NTPC) as priority as stocks in many stations may last for barely a week.• Utilise existing resources to the fullest possible. When various pockets of the country are facing shortages, as much as 13,000 MW and on some days even 16,000 mw of capacity is not available to generate power for some reason or the other every day. A combination of factors could be behind this anomalous situation, but the existing shortage could have been eased considerably if even 10,000 MW of this capacity was available for generation.• The Centre has come out with a national electricity policy and is in the process of coming out with a tariff policy. Though delayed, these are important policy papers that would shape the power sector. The tariff policy shapes how state governments—the implementing agencies—would charge consumers. Sources indicate that some of the crucial elements of this policy have been left to the Forum Of Regulators to decide. Empowering regulators is good, but to not repeat the mistakes of the 1990s, the Centre and state government have to do some handholding until a suitable consensus of critical issues is reached. Regulatory risks have to be curtailed to bare minimum if private investments in the power sector have to flow in. At present, having two or three investors shaping policies is detrimental to competition.• SEBs are one of the largest employers in India—some have as many as 60,000 employees. If unbundling has to serve its purpose of, as the PM put it, ‘‘ensuring efficiency, economy and enhancement of generation’’ one also needs to figure out who is going to meet their pension liabilities once corporatised. This liability alone can be in the order of Rs 3,000 crore for one state.
