Electricity & tariff policies likely by mid December

NEW DELHI: The taskforce on power sector investments and reforms headed by N K Singh has reached the final leg of deliberations. The power ministry is hoping to come out with the electricity policy and the tariff policy by mid-December.
The task force, which will be holding three meetings before the end of December, will be deliberating on aspects related to lenders and financial institutions, fiscal incentives for power sector investors and the fine print of the tariff policy and electricity policy.
Among the issues relating to lending for the power sector, sources said that measures would have to be taken to improve lending to the power sector. “Financial institutions were not forthcoming to provide debt to the power sector because of the inherent problems,� sources said.
While on one hand the government will have to work on relaxation of sectoral caps for lending, the lenders have to also learn to provide debt to projects based on the reforms initiated in the states. Although interest rates have come down, the lenders have to also address the issue of long-term debt, sources said.
FIs have always demanded a guarantee or an escrow to provide loans. However, now lending has to be focused on the state’s reforms, sources said. In fact, REC and PFC have already started funding on these grounds, power ministry officials said. Almost 11 SEBs have shown an improvement in their revenue collection in the last few months.
On the fiscal front there is a clear case of rationalising duties. “The high duties jack up tariffs and consumers have to pay higher tariffs,� sources said. There is also a concern about the high cost of capital goods and the task force is expected to come out with some recommendations of how to scale down costs .
The task force has had several rounds of discussions over the last two months to deliberate on the national electricity and tariff policy. From consumer groups, private companies and lenders to power companies, there have been representatives from BSES, Tata Power, CESC Ahmedabad Electricity etc.