'Indo-US collaboration extends to power sector'

Washington, Apr 26: Indo-US cooperation in energy areas has been crystallizing over the years in government, academia and industry.

Some collaboration in the coal, gas and electricity sectors now exist and a number of American enterprises are operating in India but the magnitude is small relative to the total potential that can be exploited, Union Minister of Power Sushil Kumar Shinde said at a US India Business Council (USIBC) meeting yesterday.

Immense Indo-U S energy cooperation possibilities exist in the area of energy efficiency, nuclear energy, the application of biotechnology in biomass gasification, geophysical exploration, renewables, and other clean energy technologies, Mr Shinde said.

He said the United States can also play a role in regional energy cooperation and ensuring energy security by promoting greater cooperation and integration of regional energy markets in electricity and natural gas, as well as the unhindered cross-border trading of cleaner fuels and energy resources among South Asian countries.

An Indo-US Working Group on Power and Energy Efficiency has been formed with the goals to advance understanding of efficient and reliable generation, transmission and distribution of electricity and promote the exchange of information on regulatory policies. It will undertake programs and technologies with special emphasis on the ''last mile'' distribution and clean coal preparation and modern coal conversion systems in the power generation.

This group, Shinde said, will promote the deployment of energy conservation practices that will improve the efficiency of energy use. It will also examine and implement steps to enhance trade and investment in the power sector and work with the private sector to identify areas of cooperation and collaborate with the business community on joint activities.

Presently, various programmes are running in Indian Power Sector with the cooperation of the United State agencies. Some of them are Distribution Reforms, Upgrades and Management (DRUM) project; Green Business Center (GBC) Programme; Greenhouse Gas Pollution Prevention (GEP); Energy Conservation and Commercialization (ECO) Project; Development Credit Authority (DCA) Programme etc.

Bringing the availability of energy up to the global average will require huge additions to the energy infrastructure in India. To attract foreign participation and investment in the energy sector, Shinde said, the Indian Government has taken various policy initiatives towards reforms, minimize the requirement of government sanctions in all the segments of power sector be it generation, transmission or distribution.

The minister also outlined the steps taken to improve power availability, transmission and distribution. The new Electricity Act notified in the year 2003 provides that Regulatory Commissions shall adopt the tariff if it is determined through transparent process of bidding in accordance with the guidelines issued by the Central Government. This aims at moving away from cost and norm based approach for tariff determination to competitive guiding tariff fixation. We must recognize the fact that competition will bring significant benefits to consumers.

National Electricity Policy, notified in the year 2005, stipulates that all efforts would need to be made to bring the power industry at a stage in which competition will determine the price rather than any cost plus exercise, the minister said.

The Electricity Tariff Policy notified in January 2006, stipulates that future requirement of power needs to be procured competitively by distribution licensee except in cases of expansion of existing projects or where there is a State controlled/owned company identified as developer. Even Public Sector Undertakings will have to bid for projects for determination of tariff after this transition period of five years.

In a bid to make the power sector more convenient to the private investors, the Ministry has constituted an Inter Institutional Group to facilitate financial closure of private sector projects. This group has provided a forum for interaction amongst promoters of power projects, banks, financial institutions and the Ministry of Power. Financial closure of 13 power projects with an aggregate installed capacity of about 5000 MW has been facilitated by this group. In addition, the group is presently facilitating financial closure of another 10 projects with a total installed capacity of 11,432 MW.

The Ministry has also been successful in reviving the Dabhol Power Project, which was shut down from June 2001 following disputes between Dabhol Power Company and the state.

A joint venture company by the name of Ratnagiri Gas and Power Private Ltd, with the shareholding of National Thermal Power Corporation, Gas Authority of India Ltd, Indian Financial Institutions and the state has been constituted to restart the power plant and complete the construction of phase-II and the associated LNG terminal. The project is expected to start the generation of power by middle of 2006.

Similar to the initiatives taken by the Government for developing countrywide network for vital infrastructure, like telecom and highways, Shinde said the government is focusing on creation of a National Power Grid as well, in a phased manner towards fulfilment of its mission of providing ''Power to All by 2012''. Such an integrated grid shall ultimately enhance inter-regional power transfer capacity to about 37,000 MW at an estimated investment of 16,000 million dollars in the Central Sector. Inter-regional power capacity of 9500 MW has already been achieved.

UNI