Poor show in power sector will trip economic growth, says PM

NEW DELHI: PM Manmohan Singh on Monday called for a "crash programme (course)" on raising India's generation capacity, saying the dismal pace of reforms in the power sector will trip overall economic growth and called upon states to check electricity theft that was bleeding the system. "There is general agreement on the need to rapidly reduce transmission and distribution losses...If we expect the economy to keep growing at 9-10% per annum, we need a commensurate growth in the power supply...I request all chief ministers to launch a campaign against theft in their states," Singh told a CMs' conference on power sector. For good measure, PM added, "In fact, time is running out, and unless we are able to arrest the growing shortages, the effect on our economy may well prove disastrous." "We have not been able to make a decisive breakthrough in ensuring high and sustainable rates of growth of this sector and improving its financial health...The current level of losses in transmission and distribution, ranging between 30-45% in many states, threatens the financial health of the sector. A large proportion of these losses are due to theft. Theft is the cancer of the power sector." Concerned over the slow pace of capacity addition, given that only half of the 41,000 mw target could be achieved in the 10th Plan, the PM announced setting up of a dedicated, professionally-managed National Power Project Management Board to keep track of 11th Plan projects. Singh also announced setting up of a task force to develop hydel projects and look into issues of rehabilitation and resettlement of affected persons. The PM said states and the Centre had every right to intervene decisively in case the sector regulators did not take measures strictly in consonance with public interest. "After all, the law is quite clear on this. Regulators should regulate — but not over-regulate. They should not become parking places for retired bureaucrats." The conference resolved to set up a standing group of power ministers, on the lines of a grouping of state finance ministers on VAT, to look at issues affecting the power sector. With over Rs 600,000 crore investment needed during the 11th Plan, Singh also announced setting up a sub-committee of the standing group to look at financing issues, particularly for upgrading transmission networks. While the standing group would be headed by power minister Sushilkumar Shinde, the sub-group would be chaired by FM P Chidambaram and include deputy chairman of plan panel Montek Singh Ahluwalia. "I expect this sub-committee to finish its work in three months," he said. Singh said the sector required a "crash programme" for capacity addition to eliminate shortages by 2012 and pegged the investment needs at over Rs 600,000 crore during the 11th Plan period. He said the sector's inability to attract private players on a big scale was a serious issue.

source:29 May, 2007 -TIMES NEWS NETWORK