COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Gujarat sets pace for power sector reforms: GEB to be trifurcated

In a bold move to restructure and reform the power sector with far-reaching consequences, the Gujarat government today decided to set up a State Electricity Regulatory Commission, trifurcate the Gujarat Electricity Board into separate functional corporate entities to deal with generation, transmission and distribution of power.

The government also announced the much-awaited policy to govern the operational aspects of captive power plants.

According to highly-placed official sources in Gandhinagar, the commission will be set up under the provisions of the Centre's Electricity Regulatory Commission Act, 1998, making Gujarat the third state in the country, after Haryana and Orissa, to reform the power sector.

The state government also finalised constitution of a selection committee which will send its recommendations to the state government in a month's time for selection of chairman and members of the commission.

The state government also decided to bring in a couple of months, a legislation to unbundle and trifurcate the Gujarat Electricity Board into separate functional corporate entities dealing with generation, transmission and distribution of power.

The Tata Engineering and Research Institute was in the process of drafting the legislation which will be shortly submitted to the state Cabinet for consideration, the sources pointed out.

Besides, the state government was also considering reforming the distribution sector and then gradually privatising it. It was, however, yet to be decided on which particular route -- that is, management contract or outright long-term lease be chosen for the privatisation of distribution of electricity.

With regard to the reform and restructuring of power sector in Gujarat, a number of rounds of deliberations had been held but nothing concrete could be done even after making a commitment to Asian Development Bank.

Apart from taking these steps, the state government also announced today the much awaited policy to govern the operational aspects of captive power plants. Under its power policy of 1995, the state government maintained that with these steps, captive generation would ease the burden on distribution system and also make available surplus power for the state grid.

As per the provisions of the Electricity (Supply) Act, 1948, captive power plants were being set up after obtaining consent of GEB, a process intensified after the 1995 policy.

The sources pointed out that, as of today, a total capacity of more than 2800 megawatt had been sanctioned, out of which plants with a capacity of 1800 megawatt were under operation. A whopping investment of Rs 54 billion had been made so far in these plants.

Under the newly-announced policy, the provisions permit wheeling of power to group companies with wheeling charges at a rate of 13.5 paise and 21 paise per unit for extremely high voltage and high voltage transmission respectively.

A deduction on account of system losses of ten and 15 per cent for EHV and HV respectively, had also been provided for. No wheeling will be permitted if the system frequency increased to more than 51 hertz.

Secondly, the policy provides for a liberal definition of group companies with a minimum share of holding or voting power of 26 per cent. A minimum consumption level of 50 per cent of electricity generated by the company setting up captive power plant had also been specified.

The new policy sought to remove the anomalies in the earlier power policy of December 1997 and also address the genuine concerns of industry for quality power. It was expected to help the state government in augmenting the generation capacity quickly to serve as a cheap source of power in times of need. The captive plants were also expected to serve as peak load stations, thus supplementing base-load generation.

According to the sources, in order to protect government revenues, while wheeling had been permitted, the electricity duty and tax on sale of electricity will be assessed as if the supply to the group company was being made at GEB tariff. Deduction of 15 and ten per cent of power wheeled for system losses as well as levying of EHV and HV transmission wheeling charges of 21 and 13.5 paise, per unit, would protect the GEB's interest.

In the light of the experience thus gained, the state government may review the policy in future, the sources added.

UNI

Business news

Gujarat