The Power Ministry recently reviewed the latest situation in the mega power sector and took note of the problems which have been delaying the implementation of projects. The misgivings of the state power utilities as also domestic power equipment manufacturers were also taken into account while making a reappraisal of the mega power policy. The Ministry also took cautious steps on further privatising the distribution system.

It has been decided that the existing condition of privatisation of distribution by power purchasing states would be replaced by the condition that power purchasing states shall undertake to carry out distribution reforms as laid down by the Power Ministry. Further, the conditions requiring inter-state sale of power for getting mega power status would be removed.

The latest policy stipulates that the present dispensation of 15 per cent price preference available to the domestic bidders in case of cost plus projects of PSUs would continue. However, the price reference will not apply to tariff-based competitively bid projects of PSUs. A committee would be set up under the Planning Commission to suggest options and modalities to take care of the disadvantages suffered by the domestic industry related to power sector keeping all factors in view.

The benefits of mega power policy will also be extended to supercritical projects to be awarded through ICB with the mandatory condition of setting up indigenous manufacturing facility provided they meet the eligibility criteria. Similarly, mega power projects would be required to tie up power supply to the distribution companies/ utilities through long-term power purchase agreements and may well sell power outside long term PPAs in accordance with the National Electricity Policy 2005 and Tariff Policy 2006, as amended from time to time by the Government of India.

Meanwhile, a recent assessment made by the Central Electricity Authority (CEA) shows that against a planned capacity addition target of 78,700 MW, projects with a capacity of 18235 MW have already been commissioned till October 21, 2009 and 62375 MW are under various stages of construction. A capacity of 44138 MW is likely to be commissioned with a high level of certainty during the remaining period of the Eleventh Plan. In addition, a capacity of 12590 MW may materialise on best effort basis during the Eleventh Plan period. (IPA)