Power Development Strategy

1. INDIA Power Development Strategy Presentation in World Bank, Washington DC R.V. SHAHI SECRETARY MINISTRY OF POWER GOVERNMENT OF INDIA June 23, 2003

2. Indian Power Sector • Power in Concurrent list : • Both Central and State Governments have jurisdiction • Power Sector in States • Vertically integrated State Electricity Boards (being restructured) • Central Public Sector Undertakings • Own 30% of the capacity

3. Growth of the Indian Power Sector • Generating capacity has grown manifold from 1712 MW in 1950 to more than 108,000 MW today. • The growth in the transmission lines has been from 2708 ckm in 1950 to more than 200,000 ckm today. • About 84% of 587,000 villages have been electrified, balance to be electrified by 2007. • 55% households have access to Electricity, balance to be covered by 2012.

4. Present scenario - the challenge • Financial health of SEBs Business as usual continues Results targeted Losses (Rs. Cr.) Years Contd. ..

5. Present scenario - the challengeContd. ….. • Power : removing shortages and improving Reliability & Quality Results targeted Peaking Shortage % Installed Capacity 108,000 MW 146,000 MW 212,000 MW

6. POWER SECTOR DEVELOPMENT OBJECTIVES STRATEGY ACTION • Sufficient power for 8% growth Generation Transmission • Reliable power Distribution • Quality power Regulation • Inexpensive power Financing Conservation • Commercial viability Communication • Power to All Legislative initiatives

7. Power Generation • # STRATEGY • Low cost generation • Optimum utilization of capacity • Control Input cost • Better fuel mix • Hydro improvement • Technology upgradation • Non conventional energy sources

8. # ACTION • Strengthened monitoring effort • Advance Action plan for projects identified / under approval stage • Expansion of existing stations • Pit head stations • Coastal stations • Generation delicensing • Captive capacity utilization • Select IPPs to be assisted • R&M of old plants (AG&SP)

9. Transmission • # STRATEGY • National Grid • Interstate connections • Technology upgradation • Optimization of Transmission cost

10. # ACTION • Development of National Grid : 8000 MW today to 30,000 MW of inter regional transfer capability by year 2012 • Technology upgradation • RLDCs modernization • Close monitoring on reliability • Private participation • Independent Power Transmission Co. • Joint Venture with Powergrid

11. Distribution • # STRATEGY Distribution Reforms aimed at • System upgradation • Loss reduction (Aggregate Technical & Commercial losses) • Theft control • Consumer orientation • Commercialization • Decentralized distributed generation and supply for rural areas • Introducing competition • I.T. to replace human interfaces

12. # ACTION • Energy accounting • Metering • Organization restructuring • Franchisees • Technology input • Anti theft laws • Accelerated Power Development & Reform Programme (APDRP) • Incentive linked development package • Five years Business plan • Reliability index • Rating of utilities • Rural Elect. Supply Technology Mission (REST) • Accelerated Rural Electrification Programme (AREP)

13. Regulation • # STRATEGY • Commercial viability • Consumer services & satisfaction # ACTION • Tariff policy • Multi year tariff approach • To bring about commercial viability : Planning & monitoring by Regulatory Commissions • Grid discipline • Development of competitive energy market • Consumer services • Quality, reliability & safety • Growth of power industries • Collaborative efforts of Government and Regulatory Commissions

14. Financing • Performing Central Undertakings on their own • One time settlement of outstanding dues of CPSUs • Central Govt. Plan allocation for Xth Plan up by 270%. • NTPC, Powergrid, PFC, REC, the major Central Undertakings to access equity market. • All Central undertakings to access debt market up to debt leveraging scope • External assistance from JBIC, ADB, World Bank etc. • Other Investors/ Lenders to finance based on progress on reforms. • Discussions on with major Business groups to invest in the Sector.

15. Conservation # STRATEGY • Demand Side management • Load management • Technology upgradation to provide energy efficient equipment / gadgets.

16. # ACTION • Bureau of Energy Efficiency. • Notified industries. • Interface with IEEMA & other Industry Bodies. • Awareness. • Demand Side Management • Specifications / Labelling / Norms • Certification agency. • Energy audit. • 25,000 MW saving potential to be achieved by 2012.

17. Communication • Political consensus. • Public Awareness • Media support

18. Legislative • Electricity Act, 2003 - notified on 10th June ‘03 : • Creates liberal framework for power development • Facilitates private investment • Delicenses generation : Captive further liberalised • Multiple licencess in Distribution • Creates competitive environment • Stringent provisions for controlling theft of electricity • Empowers States to restructure Electricity Boards • Mandates creation of Regulatory Commissions • Open access on Transmission & Distribution • Power marketing / trading

19. The way forward • Reforms leading to commercialization of Distribution sector • Sector viability in medium / long term to support investments • Decentralized distribution / generation for electrification of rural areas • Streamlined / exemption in clearance procedures along with delegation to States • Amicable project specific R&R packages • Public sector investments have been stepped up during transition period • Funding for Generation (Hydro & Thermal), Transmission and Rural Electrification • The Sectoral development should now get the boost with confidence and cooperation of Promotors, Investors and Financial Institutions

20. Thank You Ministry of Power Website http://powermin.nic.in