No rollback on reforms in power sector now
Anupma Airy
The fall of the United Front government has left behind many questions on power sector. Worried investors wonder whether there would be a U-turn in power reforms. Power minister Y K Alagh, however, is unfazed. No party can roll back the process of reforms, he says. The minister's enthusiasm has had an impact on his bureaucrats which is evident from the all-pervading optimism in the corridors of the Shram Shakti Bhawan.Alagh is trying his best to convey that a lot will still be done in the next two months on power sector reforms. During his 18 month long stint, there is no denying that the academician-turned politician has done lot to take forward the process of reforms initiated by his predecessors. Anupma Airy spoke to Alagh on his achievements and failures in the power sector. Excerpts: Do you think that the recent political fiasco will have its impact on the economic reforms initiated by you and your government as far as the power sector goes? The process of reform will continue
irrespective of the party in power. There is every reason to believe that there will be acceleration in the progress already made in the power sector. In fact, the projects which have been cleared by the government from the investment angle are jostling for financial closure and signing of the fuel supply agreements. This progress will be possible within the framework of the existing policy system and the reform process underway. The government will continue to give priority to the reform process and the monitoring of the approval system and the coordination between the financial institutions and resolving the economic aspects of the fuel supply agreements questions. But what about the unfinished agenda in this sector? I would not call it `unfinished agenda'. A beginning has been made and now it is just a matter of taking this agenda ahead. However, it would be churlish to say that one is not disappointed at the fact that many important Bills, like the transmission Bill, the electricity
regulatory authority Bill, which would have facilitated the formation of the Central Electricity Regulatory Commission (CERC) and the State Electricity Regulatory Commission (SERC), could not be taken up in this session of Parliament and also the Electricity Conservation Legislation which was to be introduced in the Parliament will not see the light of the day. However, I am told that the standing committee of Parliament in the energy sector has already given its report on the transmission Bill and this will be of substantive help to the next session of Parliament after the election process is completed. I strongly feel that it is possible for private investment in the power sector including international investment to be expedited within the framework of the existing policy system particularly, if you take into account, the details of the policy reforms already introduced since last year. How do you see the growth of the private sector investment in the power sector? Don't you think it is not coming
the way it should have? It is no longer correct to say that the pace of private sector investment in power is slow or poor. At the time of the evaluation of the Eighth Plan till late last year, private investment in power was nominal. The ministry has been working with CEA along with the fuel supply agencies for coal and liquid fuel and financial institutions on a project by project basis and the high powered board of the cabinet secretariat, the cabinet committee on infrastructure and the special reviews to the prime minister, to obtain necessary clearances for approval of power projects. As of now, 20 projects with a capacity of 7500 MWs and with total cost of $7 billion at the current exchange rates have been tied up in terms of finances with the Indian financial institutions (IFIs). The other aspect to note is that 31 projects to the tune of 17000 MWs have been cleared by the CEA from the techno-economic angle and can be cleared for investment. So, this is a process which is well underway and will
continue. What is in store for the fast track guarantee projects. Don't you think that the pace of these projects is sending wrong signals to the foreign investors? I agree that the fast track projects did not go through the fast track. The government has cleared two and few more are on the verge of being cleared. By and large, the problems in these projects has been related to the counter guarantees for all new projects. A few of the fast track projects will be cleared by this month end. As far as the investors are concerned, I would say that India may be going slow and steady but at least we don't go back on our promises. What about the show case projects? There has been a lot of debate in various forums on the government going back on its stand of competitive bidding? This point must be clarified. We have not gone back on our stand and our policy is to still go in for competitive bidding. However, since India has received proposals from various countries including Germany, Japan,
Korea, US and others, which not only talks about projects coming at a faster pace but at the same time they are offering us cheap electricity. Moreover, they are getting along financial packages for their projects. Their only precondition is that they want to come through the direct negotiation route, which I will again repeat is not between the interested company and the Indian government but the talks will be between the two state governments of the respective countries. And there is nothing wrong in looking at few projects which are getting all these comforts of cheap electricity and other benefits along. The government has already constituted an independent committee under the chairmanship of former Justice P N Bhagwati which is evaluating all these proposals. They will establish the parameters on which these projects will be negotiated. Do you have any specific plans to be taken up in the next few months before elections? There are a number of ongoing exercises for facilitating
investments and for providing a more conducive framework. While it is absolutely true that no new major policy initiatives can be taken up until March next year, there is every reason to believe that the power sector will continue to expand on the foundations already laid and there is no reason to believe that many of the decisions in the ensuing weeks and months cannot be taken or will be delayed. My message to foreign investors is that India means business in power sector and that business of power in many cases cuts across political lines.
Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.
|
