The Indian Budget 1996-97 The Indian Economy Overview

IN DEPTH: New Policies for Indian Power Industry

[Indian Power Industry] [Related Pages: 1 2 3 4 5 6 7]

Indian Government Proposes New Policies for Power Sector

The Indian government has a responsibility towards industrial and economic development, which can only be met by boosting the power generation infrastructure in the country. To do this, some new policies have been put into action.

Rural education is still dependent on kerosene lamplight.
Indian industry desperately needs better power infrastructure than is currently available in the country, for its survial. The government needs to take decisive measures to prop up the sorely lagging power generation capabilities in India. Large scale privatization and thorough policy restructuring are the need of the day, for the power industry to gear up and meet present and future needs.

Two recent policies are aimed at doing just that. The State Electricity Boards (SEBs), with the help of private partners, are planning to renovate the existing power plants by improving technology.

Suffering from a chronic fuel shortage, most plants simply shut down for extended periods every day, leaving consumers in the dark. Big factories that need a steady supply of electricity are setting up captive power plants that run on high speed diesel or other heavy fuels.

The new liquid fuel policy is expected to cater to the captive fuel needs of such plants. Independent power producers will be permitted to use heavy petroleum stock (HPS), low sulphur heavy stock (LSHS), heavy furnace oil (HFO), furnace oil (FO) and natural gas as primary fuel for the power projects. However, the government has not allowed high speed diesel to be used as a fuel for these plants. While these policies show that the government is making some effort to stall the impending power crisis, other issues are awaiting decisions.

On the consumer management side, the government has facilitated the restructuring of the State Electricity Boards with the help of the World Bank.

Among the other policies on the anvil is a plan to privatize the fuel supply system. In most proposed power projects, fuel leakage and fuel risk responsibility have been among the main stumbling blocks. The state as the fuel supplier is unwilling to sign any guarantees and the private power companies are unwilling to risk running out of fuel.

The new policies may be part of the solution, but industry waits with bated breath to see how effective these policies are in the long run. There may be light at the end of the tunnel, yet...

[Indian Power Industry] [Related Pages: 1 2 3 4 5 6 7]

Parosh Buragohain is an expert commentrator on the Indian infrastructural sector in local and foreign print media.

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