Stating this while addressing a news conference on the outcome of the chief minister's conference held in the capital on Friday, Union power minister PR Kumaramangalam said that the prime minister has set firm and tight targets for the power sector and asked the power ministry to ensure that at least 10 power projects must achieve financial closure and start construction by March 31, 1999.

The minister said that the inter-ministerial group, christened as `crisis resolution' group, will meet at least once a month to resolve the last problems being faced by the power project promoters. The constitution of this group will be done soon, the minister added. Kumaramangalam said that his ministry will release the names of 15 power projectswithin a week, which can achieve financial closure by March 1999.

The minister informed that the chief ministers have agreed on constituting the state electricity regulatory commissions (SERCs) by March 31, 1999, in order to enable rationalisation of tariffs and improvement of the financial health of the state electricity boards (SEBs) and avail of the interest subsidy on loans by the Power Finance Corporation (PFC).

"Each state would also announce a power reform policy and initiate steps for drawing up a reform Bill in accordance with its provisions in a time bound manner", Kumaramangalam added. On the issue of introducing a five paise power cess on generation of electricity from all power generating stations throughout the country, the minister said that he plans to take this to the Cabinet for its approval.

He admitted that some states expressed their apprehensions on implementing the cess as this would call for a equivalent hike in the cost of electricity. However, with the states getting 60 percent as revenue out of this cess collection, there is bound to be a consensus on this issue, he said. The minister said that a 5 paise cess on generation would result in a revenue of at least Rs 1,500 crore a year going to the states for developing the power sector.

The Centre, he said, will get Rs 400 crore as its share. The total proceeds after levying this cess will go to the Consolidated Fund of India from where it will be distributed amongst the states and the Centre in the ratio of 6:4. Kumaramanglam said that a Bill on the power cess will be introduced on December 23 in Parliament.

On recovering dues of the central public sector undertakings (CPSUs) from the states, the minister said that a plan has been drawn in this regard as per which a single special purpose vehicle (SPV) will be created for all states. This SPV will recover dues from plan allocations of state governments by March, 1999.

On minimising transmission and distribution losses and facilitate higher investments in system improvementand ensure reliable power to the consumer, the minister said that reforms of the distribution sector will be initiated by establishing distribution companies in different regions of each state.

"The entry of private investors will be encouraged wherever feasible. To begin with, at least 25 per cent of a state will be taken up for distribution reform and would be completed within four years", the minister said.