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NEW DELHI :
Reflecting India ’strategy of using the crisis to initiate reforms, Prime Minister Narendra Modi took a meeting of the power sector on Friday where various long-term reforms were discussed.
The National Democratic Alliance (NDA) government has readied a raft of power sector reforms, including implementing the direct benefit transfer (DBT) scheme in the electricity sector for better targeting of subsidies, promoting retail competition and instilling financial discipline at state-owned electricity distribution companies (discoms).
“The discussions included measures regarding ease of doing business; propagation of renewables; flexibility in supply of coal; role of public-private partnerships; and boosting investment in the power sector. PM underlined the significance of the power sector in propelling the economy. The need for effective enforcement of contracts for attracting private investments was discussed, “the government said in a statement.
The meeting was attended by home minister Amit Shah, finance minister Nirmala Sitharaman and power minister Raj Kumar Singh among other officials.
According to the draft Electricity Act (Amendment) Bill 2020 to the Electricity Act, 2003, which is available on the power ministry’s website, the government has pitched for a cost reflective tariff and setting up an Electricity Contract Enforcement Authority to enforce power purchase agreements ( PPAs).
Mint reported on 18 February about the Union government plans to set up a new tribunal solely to enforce power purchase contracts. This comes in the backdrop of the investor criticism over controversial attempt by some state agreements to renegotiate clean energy tariffs with developers.
“I emphasized the importance of consumer centricity and directed to work towards the goal of supplying 24X7 quality and reliable power to all consumers,” the statement added.
Escalating measures to combat the spread of covid-19, the Central government on Friday announced a further two-week extension to the ongoing lockdown with effect from 4 May; while restarting economic activities in pandemic free zones. This may result in some electricity demand picking up.
“We have to be brave and bring in reforms that touch the lives of common citizens,” Modi had earlier said.
This comes in there backdrop of India ’40-day long national lockdown resulting in a 30% reduction in the country’s energy demand, according to Paris-based International Energy Agency (IEA).
The nationwide lockdown has resulted in peak electricity demand coming down, with commercial and industrial power demand taking a hit after many factories shut down. However, household consumption, which accounts for around a quarter of India’s power demand, has gone up.
Energy consumption, especially electricity and refinery products, is usually linked to overall demand in the economy.
“Measures for improving viability of distribution companies, including tariff rationalization and timely release of subsidies along with improved governance were also discussed,” the statement added.
