The government is taking concrete steps for record power augmentation at a growth rate of 9 percent during the Eleventh Five Year Plan and projects are already underway to achieve the target of 78,500 MW additional generation capacities by the end of the Plan, according to Mr. Rakesh Nath, Chairman, Central Electricity Authority (CEA).

Mr. Nath was speaking at a Conference on Developing Power Market organized jointly by PHD Chamber and PTC India Ltd today in New Delhi. He said that the planning canvass for power projects should be extended to ten years from six to seven years as of now. This is on account of the long gestation period experienced in executing the power projects, both hydro and thermal. Within the next fifteen days, a discussion paper on the Power Sector in the Twelfth Plan would be circulated to get the responses and comments of the stakeholders including industry, he added.

Mr. Nath mentioned that the private sector’s contribution to the additional capacity of power would be 27,000 MW, of that 11,000 MW would be from the captive power units. The proposed plan for the augmentation of the power capacities would also focus on building coal linkages and developing railway networks in order to help the plants access coal in time and in required quantities. He said that there would be substantial increase in the coal imports by the power plans to meet their generation targets.

Mr. Nath observed that the issue of open access to power should be addressed so also open bidding for leased mines as in the case of ultra modern power plants. He also underscored the need for completing Case 1 bidding by the States and extending the timeframe for such appraisals to more than five years.

Mr. T N Thakur, Chairman & Managing Director, PTC India Ltd, in his presentation said that with growing competition and capping on short term margin by CERC at 4 paise/kwh, the risk appetite of the intermediaries have been considerably affected. He said that in order to attract more investment in the power sector and to give adequate return to the shareholders of trading companies, the power should be allowed to be traded at the market prices. That will help more players to come up in the intermediation space, building competition and subsequently bring down the unit price of the power. “For augmenting investment, it is critically important to move from fixed rates to market determined rates,” he added.

Mr. Thakur said that currently, 20 billion units of power are traded, including the 5 billion units bought from the neighboring countries. In 2007-08, that constituted only 2-3 percent of the total power generated in the country. “Our effort should be to increase the total volume of power traded in the country. That would ensure optimal use of power by drawing power from surplus production bases to scarce areas,” he added. He also informed that presently, there are 26 power traders are licensed under CERC and in future the number of traders would grow up considerably as is the case in developed countries.

Mr. Thakur disclosed that PTC India Ltd has been able to sign PPP with Independent Power Producers for generation of 11,000 MW and negotiations for generation of another 30,000 MW is under advanced stage of negotiation. A total investment of Rs.50,000 crore is already been committed in this regard. He said that capping of power rates, as discussed in some quarters would go against the interest of more investment in the sector. A liberal and pragmatic approach towards power trading could help innovating new products, which can help consumers. More trading slots based on various timeframes should be created for power. Presently, there are only two types of open access available, that is for period up to three months and the other is for 25 years or more on long term.

Mr. Ravi Wig, Past President, PHD Chamber and Chairman, NRD Council, said that the basic idea of creating power trading in the country is to enhance investment. The power traded in the country is miniscule as compared to the volume in developed countries. He wanted that legal framework should be such to promote trading and induction of more companies as intermediaries.

Others who spoke at the meeting included Mr. I S Jha, Executive Director, Power Grid Corporation and Mr. A K Jain, Executive Director, Power Finance Corporation.

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