Power Ministry revamps electricity policy

The power ministry has drastically revamped the National Electricity Policy prepared by the N.K. Singh committee earlier this year and synch...

The power ministry has drastically revamped the National Electricity Policy prepared by the N.K. Singh committee earlier this year and synchronised it in line with the CMP.

While there are several deletions, some of the crucial additions pertain to financing of the power sector programmes, cross-subsidies, competition, rural electrification and access to electricity in the next five years against the earlier deadline of 2012.

While the Electricity Act does not specify any time frame for elimination of cross-subsidies, it still requires them to be eliminated within a period to be specified by the regulator.

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After the N.K. Singh report, there was a general thinking that this time frame will be set at five years. However, “the matter regarding cross-subsidies will be further re-examined after five years”.

The new draft accords top priority to rural electrification. The government has now recognised the need for providing necessary capital subsidy and soft long-term debt finances for investment in rural electrification to reduce the cost of power supply.

The final draft of the policy has now been circulated to state chief secretaries for their comments. The policy is likley to be announced in August by Power Minister P.M. Sayeed.

Under the policy, a role for both the public and the private sector has been envisaged and the quantum of funds to meet power requirements in the next five years has been estimated at Rs 9,00,000 crore.

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The policy said an appropriate return of investment will be provided for the private sector, while for the public sector, this money would come in large part from their internal resources.