Power generation delicense on the anvil

According to Mr. S.S. Sharma, special secretary in the union power ministry, the central government, which has given a counter guarantee to the Enron-led Dabhol Power Company in case of defaults by the state electricity board, is yet to be formally notified by the company about the delayed payments made to it by the Maharashtra State Electricity Board (MSEB). "The issue is now between the company and MSEB and the question our stepping in now is not there," he added.

Since January this year, MSEB, which has to pay Dabhol Power Rs. 7.80 per unit of power, has been making delayed payments to Dabhol Power, thereby worrying the lenders. This development is expected to have its impact on phase II of Dabhol Power's 1,444 MW project.

Earlier, addressing the fourth energy summit organised by CII, Mr Sharma announced that the Electricity Bill 2000 would delicence the power generation activity except for inter state hydel projects. He also said that the government would allow the private sector to trade in power, thus effectively breaking the monopoly of Power Trading Corporation.

As per current scheme of things, only Power Trading Corporation can purchase power from mega power projects and sell to State Electricity Boards. When queried as to why the government should license power traders when it is planning to delicence generation Mr. Sharma said, "What we visualize is power trading exchange like stock exchange. For that purpose the traders are to be licensed."

Reacting to Mr. Sharma's announcement about delicensing the generation section, Mr. N.G. Devasahayam, infrastructure consultant and former chairman, Haryana State Electricity Board remarks, "today power projects are licensed by state governments. I don't understand what the announcement actually means."

Further he adds that delicensing would be of some meaning if the government allows third party sales by generators. In fact if power trading will be active only if third party sales are allowed. Today all the private power generators have to sell the power to state electricity boards. "If Mr. Sharma means allowing third party sales by generators then it is a welcome feature," he remarks. Such a development would result in the entry of pure merchant power generating companies as in USA.