Union Budget and Power Sector

[RadhakrishnanKollam]

Budget failed power sector: Dr D Shina
‘Thrust on thermal power cannot be termed wise’

Though the power sector had not expected much of the Union government’s 2014-2015 interim budget, the absence of indications for a change of policy towards the sector is disheartening, electricity finance expert D. Shina has said.

In a statement on the power sector in the budget, Dr. Shina said Finance Minister P. Chidambaram had failed to address the real and immediate problems of the sector.

Mr. Chidambaram highlighted the doubling of the country’s power capacity from 112,700 MW to 234,600 MW in 10 years, disregarding the fact that much more was needed considering India’s industrial growth during the decade.

Even now power shortage was a main bottleneck in industrial growth, she said. Though there was mention of 50,000 MW additional capacity under construction in the thermal and hydel sectors, the budget failed to take a serious note of the slow progress towards realisation of this additional capacity.

The thrust in the budget was for thermal power since most of the new projects under construction were in that sector. The target for the 12th Plan was more than 88,000 MW of which 60,000-65,000 MW was thermal, mostly from private sector. Since coal supply was fast depleting, and there was huge hydel potential in the country, this policy could not be regarded wise, she said.

Dr. Shina said that the lack of a single window clearance and coordination between Central agencies hampered the tapping of the enormous hydel potential of the country. An environment preservation fund to compensate environmental damages due to hydel projects was a long-standing demand of the sector. Without finding solutions to the stalemate in hydel power development, the country would not be able to strive for energy self-sufficiency, Dr. Shina said.

However, efforts made towards augmenting solar power generation were welcome. Announcement in the Budget on four mega solar power projects each, with a capacity of over 500 MW, was encouraging.

The results of the Delhi election, in which power tariff was a main issue, was to be taken as an indication of the public opinion on power sector. Providing budget support for the power sector was the need of the hour, she said.


‘Hydel power needs to be tapped adequately’

‘Delhi poll result indication of opinion on power’
Source: The Hindu http://www.thehindu.com/todays-paper/tp ... 715928.ece

[RadhakrishnanKollam]

‘No proposal to bring down power price’
Big players in the power sector have many reasons to welcome Thursday’s Union Budget but nothing to cheer up the ordinary consumers, says electricity finance expert D. Shina. “This is because there are no proposals to bring down power price inflation,” said.[]

In a statement Dr. Shina said that failure of the Budget to identify weak links and an equitable allocation among generation, transmission and distribution sectors could retain many problems in the sector. The extension of 10 year tax holiday to 2017 is clearly an indication to attract more investors into the sector.

“But the fact of under-utilisation of even the existing capacity did not get much attention. Encouraging cheaper power to ensure a suitable power production mix to suit the distribution companies and the ordinary consumer has been overlooked,” she said.

There were no efforts to remove the hurdles in utilising huge renewable energy sources in the hydel sector. There was also no mention about the much awaited Environment Preservation Fund to ease clearance of hydel projects. The Budget has neglected the regional imbalance and transmission corridor congestion.

Dr. Shina said that the accelerated implementation of the Green Energy Corridor Project aimed at synchronising electricity produced from renewable sources, such as solar and wind, with conventional power stations in the grid will ease the congestion in intra-State transmission and distribution to some extent. But the Budget offers no solution for the inter-State and inter-regional transmission capacity inadequacy and that will defeat efforts to solve the generation-demand gap.

The failure to complete transmission capacity targets has virtually paralyzed electricity trading between the surplus eastern region and the ailing southern region, she said.

“It has to be noted that the present power crisis in Kerala is not a result of non-availability of power to be purchased, but because of non-availability of transmission corridor,” Dr. Shina said.

The due importance given to solar energy and allocation of Rs.500 crore for ultramodern solar power projects in State like Rajasthan, Gujarat and Tamil Nadu is a welcome step but offers no consolation to Kerala, which had to forego generation projects totalling 2,000 MW, she said.
[url]Source: The Hindu-July 13, 2014[/url]