The power ministry has signed three counter-guarantees in three weeks, thepercentage cap on rupee loans in the debt component of financing packageshas been removed, and the Power Finance Corporation has been freed to raisefunds from the market without the necessity of going to the government forapproval every time it wishes to do so. It appears the power ministry hasalso approved different models of fuel supply agreements and transportagreements with two independent power producers for projects at Bina inMadhya Pradesh and Vishakhapatnam in Andhra Pradesh.

These steps come on the heels of a move that must have required someperseverance: the introduction of the bill enabling revamp of stateelectricity boards. True, till individual states react to the Central stepand actually pick up the threads of restructuring, no real progress willtake place. But the union government's step is a significant and necessarytask dispensed with. States such as Orissa (which is already ready toprivatise transmission and distribution and has successfully involvedAmerican firm AES in the process) have shown that they are willing to forgeahead. Some other states have approached consultants on restructuring theirboards, they now have a model to follow if they wish to.

Further news suggests that the ministry is not likely to rest on itslaurels. The Financial Express reported on Monday that it is in the processof structuring a special purpose vehicle which will be used to securitisedues of central power undertakings stuck with loss-making SEBs. The impactof the international financial community's pessimism regarding India is thusbeing met with the right kind of attitude: our own house is being put inorder. The important lesson from progress on the Hinduja-National Powerproject is that the financial problems are just that: they representproblems and not a straitjacket. The project cannot get guarantee supportfrom US-Exim Bank because of the sanctions, so it is using J-Exim instead.The idea of putting our house in order is right, but crucial to power sectorinvestment is the political will the government exercises in pushing throughfuel supply and transport guarantee norms that will satisfy internationallenders. The states must respond to the central initiative, as must thepower producers as well. The huge current workforce currently employed bySEBs will have to be rationalised, which may require central interventionthrough legislative amendments. But meanwhile, while the war on the powerfront is far from won, a few battles have been fought well over the last fewweeks.

There is no doubt that the government has chosen absolutely the correctindustries to start its Big Push with.Software , on which the government hascome out with a slew of measures, is the language of progress today, andpower availability is the key enabling factor. Implementation of powerprojects could well start off a cement and steel upturn that Indian industryhas been long waiting for, proving a number of Cassandras wrong. At the sametime, it would make the government look better than the unstable ramshacklecombination it currently represents.