Tariff Wars In The Power Sector
4/18/2013 9:02 PM Thursday
Over some time now, the government has been taking measures to bring back a spark into the power sector. However, a recent order by the CERC that was aimed at safeguarding the power generators’ interests has brought to the fore irregularities in the bidding process. Shrikant Akolkar throws some light on why this decision has become a bone of contention.
The power sector has seen a lot of policy initiatives in the last one year. The announcement of the coal price pooling policy, debt restructuring of State Electricity Boards, FDI in power trading, etc. are some of these. However, as far as the economic value of the decisions is concerned, there has been no decision more striking than that of raising power tariffs, which also happens to be the most important issue in the power sector. If one studies the entire value chain of power, then power generation is the most important link. If this link fails, the entire value chain would get disrupted.
In fact, this chink in the sector’s armour has been showing through over many years now. Remember last year's massive power outage in the northern region, which plunged nearly half of the country's population in the dark for nearly two days. Besides, the power deficit in the country has also been increasing despite the addition of huge generation capacities. In short, the generation sector has hit its trough, and an urgent revival of the same is a must if the country is looking at a consistent and reliable power supply. Besides, how can we rightfully lay claim to superpower status if the country cannot generate enough electricity to provide to its homes.
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