India to set up power industry regulator to help further reforms

Apr 13, 1998 02:00 AM

Indian Power Minister Rangarajan Kumaramangalam has said the government will soon introduce legislation to set up a power industry regulator to help economic reforms in the sector. The bill is expected to lead to the formation of a Central Electricity Regulatory Commission.
A regulator for the power industry is seen as crucial under a 7-year-old liberalisation programme that seeks foreign investment to ease a huge power shortage. "After reforms in the power sector and the entry of foreign investors it became necessary to have a single controlling authority to regulate the reform process," Kumaramangalam told. "The commission will look after various issues related to power tariffs and would be the top body to regulate all power projects in the country," he said.
Kumaramangalam said the government would introduce the legislation during the monsoon session, which begins in mid-July.
He said the regulatory body was necessary to adopt a uniform approach to power issues across India. "The commission will be authorised to look into power tariff structures to be charged from consumers," Kumaramangalam said. "All states will be asked to initiate power sector reforms after the passing of the bill," he said.

The Indian government first approved a proposal in August 1997 to set up electricity regulatory bodies at federal and state levels to fix power tariffs. Legislation to set up of the commission had been expected in parliament last year but was delayed.
A new coalition led by Hindu nationalists was formed last month after mid-term elections, and it promised to carry on reforms to attract funds into the infrastructure sector.
Foreign investors have been pressing for reform in the power sector as several state electricity boards have piled up huge losses by charging economically unviable tariffs.
India plans to add a power generation capacity of around 40,000 MW during the Ninth five-year Plan (1997-2002) to ease an acute power shortage. Officials estimate the required additional capacity at more than 57,700 MW.

Source: not available
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