National board to improve power scenario


New Delhi : The central government and the states Monday decided to set up a National Power Project Management Board that will monitor capacity addition and transmission projects to meet the soaring demand of electricity in the country.

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In a resolution adopted at the conclusion of a daylong Chief Ministers' Conference on the power sector, it was decided to set up a Standing Group of Power Ministers chaired by the union power minister to meet once a quarter to review implementation of power projects.

"One of the foremost features of the conference was that all the states agreed that capacity addition has to be accelerated towards the target set by the conference," Power Secretary Anil Razdan told reporters.

The conference in a resolution recognized that an estimated generating capacity of about 20,000 MW is being sub-optimally utilised in a phase of critical power shortage.

Razdan said the conference expressed serious concern over the current level of aggregate technical and commercial (AT&C) losses posing a grave threat to the viability of the power sector, which is currently losing about Rs.470 billion annually.

The resolution wanted states to commit themselves to achieving a drastic reduction in the overall AT&C losses in the next five years to bring it down to at least 15 percent.

Prime Minister Manmohan Singh also focused on this issue in his closing remarks when he asked the chief ministers to launch a campaign against power theft.

Stating that the Electricity Act provides for constitution of special courts for speedy disposal of theft cases, he said: "These courts should be set up and operationalised soon."

The prime minister said the centre would provide financial assistance for upgrading transmission and distribution systems.

"Theft is the cancer of the power sector. We need to come down on it heavily as it is seriously affecting the financial viability of the sector as a whole," he said.

"Honest consumers who pay electricity bills regularly bear the brunt of the cost of theft," he told the conference, also attended by Finance Minister P. Chidambaram and Power Minister Sushilkumar Shinde.

The prime minister expressed concern that on an average India was facing energy shortage of around 10 percent and a peak-level shortfall of over 13 percent, which was as high as 25 percent in some states.

"Shortages of this magnitude can be a serious impediment to economic activity," he said. "We have not been able to make a decisive breakthrough in ensuring high and sustainable rates of growth of this sector and improving its financial health."

Manmohan Singh proposed to the chief ministers an Accelerated Power Development and Reforms Programme (APDRP), funded by the central government by converting loans to grants, to cut transmission and distribution losses.

"We need to upgrade the transmission and distribution system in a time-bound manner. This is an important effort as the financial viability of the sector and making it a commercial proposition depends on this initiative."

The prime minister observed that capacity addition had been rather tardy during the 10th Five-Year Plan, meeting only 50 percent of the target and reflecting poorly on the planning process at both the state and central levels.

"I feel the time has come when we need to take a close, hard look at the process of project execution in the power sector. In fact, time is running out and unless we are able to arrest the growing shortages, the effect on our economy may well prove disastrous."

Manmohan Singh said some estimates had placed investment needs in the power sector at Rs.600 billion (around $15 billion) and expressed concern that unlike telecom, electricity generation was unable to attract foreign capital.

"I think this is a serious issue that needs to be considered. Why are we unable to attract private investment? Are there systemic or structural issues that need to be addressed in order to make the sector viable and capable of providing decent returns to investors?" he queried.