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BW Businessworld

Private Lessons

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It seems there is no consensus within the government on privatisation of power distribution. While the power ministry is pushing to bring in sweeping changes to the mega power policy — such as removing the pre-condition for states to privatise their distribution business — officials in other ministries are opposed to this "retrograde step".

The mega power policy, framed a decade ago, required that the power-purchasing states undertake to privatise distribution in all cities with more than one million population, within a period fixed by the Ministry of Power.

As privatisation of power distribution has been a non-starter for many years, the ministry now wants to do away with this, to push the mega power policy. It has sent a note to other ministries for suggestions.

To this, a note by the Committee of Secretaries (CoS) to the Cabinate Secretariate says: "Power reforms have slowed down... doing away of measures linked to fiscal concessions that require privatisation of major utilities and inter-state sale of power would be a retrograde step".

A note to the CoS on the proposed changes in the mega power policy says that if some states have misused the provision of the Electricity Act to curb inter-state power sales, which the power ministry has opposed, "then why should the ministry (of power) itself send a contradictory signal and do away with this aspect"? One suggestion is that CoS should extend the existing mega power policy benefits to supercritical units (660 MW and above) and to expansion projects. But the tussle over power goes on.

(This story was published in Businessworld Issue Dated 07-09-2009)

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