NEW DELHI, June 18: The Power Ministry will soon come out with an updated private investment policy as an alternative to counter guarantee to make investment in this sector more rewarding.

"In the medium term we have to have a strategy attractive enough to ensure private investment. On counter guarantees the government has taken a stand," said Power Minister Y K Alagh.

Pointing out that a new package will soon replace the counter-guarantee policy, Alagh said, "the private sector should get a reasonable rate of return. This is the issue. Counter guarantee is for only those fast track projects which already been given the same. Investor should be able to service his debt liability. The private investment will be available only if they are able to get return for their investment. They have to be assured of at least 16 per cent return."

"This is a regulated industry. We have to have a combination of policies to ensure that investment in power sector is rewarding. It is not enough to set up regulatory bodies. What are the sets of policies by which you can bring sufficient investment. That has to be worked out," Alagh said in an interview.

"We are setting up a small group to get into these issues and formulate an alternative soon. The private investor will have a transparant system to see what is the bottom line. There can be a combination of private and public investment. We are here to create a congenial condition within the existing policy to make private investment come," he said.

He wanted a relook into all the existing models and quickly update them for a cohesive power funding programme. For this he will soon set up an expert committee with a time bound task.

Alagh said it would be foolishly optimistic not to accept there is a huge shortage in power, the Planning Commission has estimated it to be around 35,000 MW in the peak hours. "Fresh creation of capacity in the power sector takes time. We have t suffer because of the delays of the past four five years," he said.

In the last five years the private participation was only ten per cent of the total investment. This percentage has to substantially increase. "I will see it not in money terms but in mega watt terms. To say that private investment policy in the last five years was a failure will be harsh. But in the last one year a lot of fresh initiatives were taken," he emphasised.

``I am aware that what ever has to be done has to be done quickly. Of course we cannot hope the private sector share to go from 10 to 100 per cent. It has to be somewhere between. We will spell it out shortly, very convincingly," he assured.

The minister said that a new legislation on private participation in transmission will be passed in the monsoon session of parliament. Along with this legislation the new tariff structure will also come. Guruswamy Committee report on tariff fixation will come as a part of the legislation. This will give a big boost to the transmission, distribution and pricing pattern with private participation. He advocated a joint effort by the NTPC and the Nuclear Power Corporation for generation of power. Noting that the NTPC is performing very well he said that it has to redefine its role with a focus on technology.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.