Private power dreams

It seems that almost a hundred years have passed since the Private Power Sector was opened up under the liberalisation scheme of the Governm...

It seems that almost a hundred years have passed since the Private Power Sector was opened up under the liberalisation scheme of the Government of India. This lengthy duration is due to the fact that so much has been discussed and so little has happened! Independent power producers or IPPs perhaps feel that their projects will happen in their next life.

The Private Power Sector is filled with diverse characters who have contributed towards this present state. We have the Dabhol and Enron lot a superb example of brilliant planning, speed and highly innovative forward-thinking business strategies.

The AES Project which signed its PPA in 1993 for the IB Valley, still remains a mirage. The fast track projects are stuck at various stages and those that were progressing and had taken audacious steps to spend large amounts of money in wading through the morass of the hurdles and regulations were shot down at the last minute by the dillution of the counter guarantees.

In fact, private power has been underconstant attack. The IPP has faced the attacks from the Competitive Bid8217; wallas as signing the MOU Projects were all a bad idea in 1994-95 notwithstanding Dabhol, GVK etc.. It did not matter that Competitive Bid8217; Projects would not work in the present structure for Private Power. The result is there for all to see not a single competitively bid8217; Project after the Notification of 1995 has seen the light of day. After a full circle, we are back to the MOU mode for mega projects! The IPPs were attacked by the small projects versus big projects issues: the credit support types, the escrowables, the state guarantee-wallas, the SEB reforms chaps, the liquid fuel policy promoters, the fuel oil Companies, the Foreign Exchange wallas, the devaluation of the rupee since the 1991-92, the list goes on. But the biggest attack has been by way of constant changes in policy at every turn and dilution of the security package.

Private power is actually for dreamers say some. There is at the end of the sky, a beautifulrainbow, yet the beautiful dream most often turns into a nighmare. There appears, in the eyes of some, fantastic progress made through passing of various legislations and laws.

We witness policy changes, sanctions, legislations, the list goes on. Nobody has focused on the raising debt of the farmer whose electricity tariff they feel should be increased as a part of the SEB reforms. Nobody has a thought for the bankrupt industrialists whose industries have turned sick and yet is charged some of the highest industrial power tariffs in the world. IPPs make high cost power is a reputation gained from the early opportunists.

They brought a bad name to private power, perhaps jeopardising its future! IPPs have almost become 8220;untouchables8221; and 8220;undesirables8221; to those elite Policy Makers and SEBs. It is indeed sad that the 1998 budget only removed and diluted the already fragile investment climate in infrastructure projects by the withdrawal of certain concessions, for it is more important to ensure thatfacilities once given, are not misused by a few. One step forward, two steps backward?

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We continue to hope, we continue to dream, and we pray for miracles for Private Power in India at the turn of the millennium.

The author is the president of the Independent Power Producers Association of India.