Policies on merchant power plants, renewable energy
Wednesday, 24 September 2008
There has been no dearth of government initiatives in recent years to beef up generation of power to meet the rising demand for the same. But for reasons best known to the authorities concerned, most plans and programmes for setting up new power plants have fallen through with the power crisis deepening further. The persistent power crisis has been taking a heavy toll on the economy, on one hand, and causing immense sufferings to the people across the country, on the other. The government's plan to set up large power plants could not be materialised mainly due to resource constraints and bureaucratic procrastination. In case of non-implementation of private initiatives to set up power plants, the indecision on the part of the government has, no doubt, played a part. But the short-supply of gas and the single-buyer system have been major disincentives for prospective private sector entrepreneurs willing to set up power plants.
The power ministry has rightly identified the disincentives and, reportedly, taken initiatives to remove those through policy instruments. According to a report published in the FE last Monday, the power division would soon adopt a couple of policies covering issues relating to merchant power plants and use of renewable energy. Furthermore, it is considering a new legal measure for conservation of energy. Under the proposed policy concerning the merchant power plants, the sponsors will have to arrange fuel for their power plants while they will be free to sell power to customers of their choice at tariffs to be fixed through negotiations. The private power plants would also be allowed to have access to the transmission and distribution lines belonging to the public sector entities in exchange for payments for the same. As of now, the private producers have a feeling that they are hostage to a single-buyer-the state-owned Power Development Board-policy. The freedom to sell electricity to multiple sources would, surely, come as a great incentive to prospective investors in the power sector.
There is no denying that the aggravating power situation has forced the government to initiate necessary changes in the power policies that have been overdue for long. No less important is the proposed policy on renewable energy. The policy would seek greater use of renewable energy sources such as solar and wind power to generate electricity. Under this policy, the government, according to the FE report, would bring in necessary changes in the building code, making installation of solar panels at the rooftops of the high-rise buildings in major cities mandatory. The power ministry which is now busy in drafting the policies has expressed the hope that it would adopt the same by the end of the next month. That seems highly unlikely because of the procedural complexities. Even under a non-political caretaker government, the drafts of many important laws and policies have been taking longer than usual time to secure vetting by the council of advisers. The proposed policies on merchant power plants and renewable energy use might miss the final approval during the tenure of the interim administration unless the power ministry takes special care to accomplish its task efficiently and expeditiously. The performance of the caretaker government in the power sector has not been anything better than its political predecessors. Yet even getting approval for these policies under a political government might prove extremely difficult.
The power ministry has rightly identified the disincentives and, reportedly, taken initiatives to remove those through policy instruments. According to a report published in the FE last Monday, the power division would soon adopt a couple of policies covering issues relating to merchant power plants and use of renewable energy. Furthermore, it is considering a new legal measure for conservation of energy. Under the proposed policy concerning the merchant power plants, the sponsors will have to arrange fuel for their power plants while they will be free to sell power to customers of their choice at tariffs to be fixed through negotiations. The private power plants would also be allowed to have access to the transmission and distribution lines belonging to the public sector entities in exchange for payments for the same. As of now, the private producers have a feeling that they are hostage to a single-buyer-the state-owned Power Development Board-policy. The freedom to sell electricity to multiple sources would, surely, come as a great incentive to prospective investors in the power sector.
There is no denying that the aggravating power situation has forced the government to initiate necessary changes in the power policies that have been overdue for long. No less important is the proposed policy on renewable energy. The policy would seek greater use of renewable energy sources such as solar and wind power to generate electricity. Under this policy, the government, according to the FE report, would bring in necessary changes in the building code, making installation of solar panels at the rooftops of the high-rise buildings in major cities mandatory. The power ministry which is now busy in drafting the policies has expressed the hope that it would adopt the same by the end of the next month. That seems highly unlikely because of the procedural complexities. Even under a non-political caretaker government, the drafts of many important laws and policies have been taking longer than usual time to secure vetting by the council of advisers. The proposed policies on merchant power plants and renewable energy use might miss the final approval during the tenure of the interim administration unless the power ministry takes special care to accomplish its task efficiently and expeditiously. The performance of the caretaker government in the power sector has not been anything better than its political predecessors. Yet even getting approval for these policies under a political government might prove extremely difficult.