Electricity
plays a major role in a country's economic development. With
ever-increasing demand for electricity, the central government
has initiated reforms in the power sector aiming for "Power
for all by 2012". A comprehensive blueprint for the power
sector development has been prepared for achieving objectives
such as sufficiency in power to achieve 8% Gross Domestic
Product (GDP) growth rate, reliability and quality of power,
achieving optimum power cost, commercial viability of power
industry and thus achieving `Power for All'. To accomplish
this mission, the GoI has envisaged capacity addition of 1,00,000
MW by way of developing larger capacity power projects at
national level in the decade 2002-2012. It is expected that
the total capacity addition during the current financial year
will be 10,822 MW with thermal, hydro and nuclear power accounting
for 8,015 MW, 2,587 MW and 220 MW, respectively. But in order
to achieve the mission of "Power for All by 2012",
about 78,577 MW capacities will be needed during the 11th Five-year Plan.
As
a major path-breaking move in reforming the Indian power industry,
the GoI enacted the Electricity Act 2003 which has replaced
all the three former legislations which were governing this
sector earlier. The objectives of the Act were to promote
competition in the electric industry in India, rationalize
and harmonize the existing laws to create competitive environment
for benchmark competition, and also to distance the GoI from
regulatory responsibilities.
Section
63 of the Act emphasizes on the reduction of overall cost
of power by developing future power projects based on the
competitive bidding for tariff. Accordingly, the GoI issued
guidelines on January 19, 2005 for competitive bidding for
determination of tariff for procurement of power by distribution
licensees. This power policy lays down provisions for future
requirement of power which needs to be procured competitively
by distribution licensees; here provisions related to the
expansion of existing projects are excluded. Thus, for the
expansion of existing projects, the regulators will determine
the tariff based on norms. |
