Land hurdle for power projects

Stressing that the focus of the 12th Five-year Plan has to be on increasing domestic production of coal, Union Power Minister Sushilkumar Shinde on Tuesday urged the states to make available land for power projects to help achieve the capacity addition target of 88,000 MW over the next five years.

“With the target of about 88,000 MW, which includes 5,300 MW from the nuclear power proposed during the current Plan period 2012-17, we will have to address the issue of fuel availability and equally important is the issue of finding adequate land for setting up new power stations,” he said while addressing a meeting of power ministers from various states here.

With state governments playing a more proactive role in acquisition of land, he said power projects can be executed at a much faster pace. “The problem of land is no less in the setting up of the transmission infrastructure given the fact that in the current Plan period we have a target of erecting some 37, 800MW of inter-regional transmission capacity,” Shinde said.

Expressing concerns over the financial health of power distribution companies (discoms), Shinde said banks have agreed to convert loans given to state electricity boards (SEBs) into equity. “The National Electricity Fund will give interest subsidy to discoms for two years,” he added.  The most loss-making SEBs or power discoms are in Uttar Pradesh, Tamil Nadu, Rajasthan, and Punjab, among others.

Over the next few weeks, the Union Cabinet is likely to take up the proposal of restructuring about `2 lakh crore-debt of discoms. According to the proposal, about 50% of the debt would be converted into bonds that would be issued by the state governments. The remaining loans would be restructured.

Planning Commission member B K Chaturvedi said a restructuring package is being worked out by the Power Ministry in consultation with the Finance Ministry and state governments.

Meanwhile, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia also said that financial condition of discoms is a major concern for India. “I think no bank will lend to power generation companies if the distribution is weak,” he said.

Ahluwalia cautioned that states which had failed to raise power charges regularly and said they would be required to make steep adjustments.

“Many states which have not adjusted tariff for 10 years in a row and assume that even a simple inflation adjustment of 5 per cent ... They may need to adjust it by 60 per cent. Energy prices have to be aligned globally,” he said.