NEW DELHI: The empowered committee headed by cabinet secretary PK Sinha will meet for the first time on Friday to explore ushering in key reforms in the sector plagued with stressed assets.
Some radical proposals likely to be discussed include doing away with the requirement of power generation plants to have power purchase tie-ups to get coal and a payment security mechanism for timely recovery of dues from the distribution companies, sources said.
Private companies have been demanding flexible norms for coal allocation since states have not been calling power purchase tenders. “Delinking coal supplies with power purchase agreements will be a major reform for the sector. Power generation companies have to participate in tariff-based bidding for PPAs while coal availability is restricted,” a government official said.
The companies have also sought a tripartite agreement between discoms, banks and themselves to mitigate payment risk, akin to the one for public sector. The outstanding dues of power distribution utilities to private companies stands at Rs 14,000 crore, he said. The committee is expected to have representation from Reserve Bank of India (RBI) as directed by the Allahabad high court on Monday.
The call for the meeting came just a day after the HC asked the committee to submit its report within two months from July 29, the date of its constitution. The meeting will be attended by top officials of power, coal, finance and railways.
“The power ministry shall invite a representative of RBI, after consultation with the governor, as a member of the empowered committee forthwith,” it had said. The power ministry on Monday directed power regulator Central Electricity Regulatory Commission (CERC) to allow changes in any central or state government duty to be passed on to consumers even after award of bids to help revive stuck power projects. Industry insiders said the power ministry also needs to include the directive in the amendments to national tariff policy to make it legally binding on regulators.
Of banks’ gross bad loans of around Rs 11 lakh crore, power sector accounts for Rs 2.5 lakh crore. Non-availability of fuel, cancellation of coal blocks, lack of enough PPAs by states, inability of promoters to infuse equity and working capital, contractual and tariff related disputes, delay in project implementations are some of the factors responsible for the stress in the power sector.
The committee will look into ways to resolve the stress, explore changes in the fuel allocation policy to such power plants, facilitate sale of power by these stressed power plants, suggest changes required in regulatory framework for faster disposal of disputes and ensure interim payments during the pendency of the disputes, and ensure timely payments by the discoms.