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Industry Strategy


Policy Initiatives and Opportunities
The power sector is among the first sectors to be opened up for private sector investment. Though the initial impetus was on investment in power generation projects, subsequently, it has also been allowed in distribution and transmission projects. The Ministry has initiated several reform measures to attract private investment in order to enhance power generation capacity and promote energy efficiency in the country. For instance, the 'Electricity Act 2003' has been enacted to provide an enabling framework for the overall development of the power sector. It is an Act for consolidating the laws relating to generation, transmission, distribution, trading and use of electricity; taking measures conducive for development of electricity industry; promoting competition therein; and supplying electricity to all areas. The electricity Act also aims to rationalise electricity tariffs, promote efficient and environmentally benign policies, constitute CEA and regulatory commissions, provide for stringent penalties in case of theft of electricity, etc.

Under the Electricity Act 2003, the Central Government has prepared the 'National Electricity Policy' in consultation with State Governments and CEA. The policy has been announced for laying down the guidelines for accelerated development of the power sector and supply of electricity to all areas, keeping in view the availability of energy resources, technology, economics of generation and energy security issues. It aims at achieving the following objectives:

  • Access to electricity, that is, make it available for all households in next five years;
  • Demand to be fully met by 2012 and energy shortages to be overcome;
  • Supply of reliable and quality power of specified standards in an efficient manner and at reasonable rates;
  • Per capita availability of electricity to be increased to over 1000 units by 2012;
  • Minimum lifeline consumption of 1 unit/household/day as a merit good by year 2012;
  • Protection of consumers' interests, etc.

The Ministry of Power has set an ambitious mission of 'power for all by 2012', which is a comprehensive blueprint for power sector development. The mission requires that installed generation capacity should be at least 2, 00,000 MW by 2012. It aims to provide reliable, sufficient and quality power supply to all areas at an optimum cost as well as enhance commercial viability of power industry. To be able to achieve such objectives, following strategies are being adopted like:-

  • Power generation strategy with focus on low cost generation, optimisation of capacity utilization, controlling the input cost, optimisation of fuel mix, technology upgradation and utilization of non-conventional energy sources;
  • Transmission strategy with focus on development of National Grid including InterState connections, technology upgradation and optimization of transmission cost;
  • Distribution strategy with focus on system upgradation, loss reduction, theft control, consumer service orientation, quality power supply commercialization, decentralized distributed generation and supply for rural areas;
  • Financing strategy to generate resources for required growth of the power sector; etc.

Besides, the Ministry envisages establishing an integrated 'National Power Grid' in the country in a phased manner by the year 2012. The first phase has been completed in 2002, wherein regional grids were mainly connected by HVDC back to back stations and inter regional power transfer capacity of 5050 MW has been established. The implementation of second phase has already commenced and with the commissioning of Talcher Kolar HVDC bipole, Raipur Rourkela 400 kV D/C transmission system along with series compensation and second back to back station at Gajuwaka, inter regional power transfer capacity has grown to 9450 MW. It has created a synchronous grid from Arunachal Pradesh to Goa spanning across a length of 2500 km, encompassing an area of 16 lakh sq km with an installed capacity of over 50,000 MW. The third phase includes strengthening of national grid to Southern region through 765 Kv AC lines/ HVDC lines as well as linking North Eastern region with rest of national grid through high capacity transmission system. Under it, the cumulative inter regional power transfer capacity is expected to rise more than 30,000 MW by 2012.

Moreover, rural electrification is considered vital programme for the socio-economic development of rural areas. Its objectives are to trigger economic growth and generate employment by providing electricity as an input for productive uses in agriculture and rural industries as well as improve the quality of life of the rural people by supplying electricity for lighting of homes, shops, community centres and public places in all villages.

The Government of India, from time to time, has been launching several programmes for electrification of rural areas in the country. For instance, the 'Rural Electrification Supply Technology (REST) Mission' has been launched with a view to accelerate electrification of all villages and households progressively by year 2012 through local renewable energy sources, decentralized technologies and conventional grid connection. It aims to provide affordable and reliable power supply to rural areas and effect implementation through distributed generation schemes, wherever feasible.

Besides, a scheme called the 'Rajiv Gandhi Grameen Vidhyutikaran Yojana (RGGVY) for Rural Electricity Infrastructure and Household Electrification' has been introduced in April, 2005 for achieving the National Common Minimum Programme objectives of providing access to electricity to all rural households over a period of four years. The Rural Electrification Corporation (REC) is the nodal agency for implementation of the scheme. Under this scheme, 90% Capital Subsidy will be provided for rural electrification infrastructure projects through-

  • Creation of Rural Electricity Distribution Backbone (REDB) with one 33/11 kV (or 66/11 kV) substation in every block appropriately linked to the State Transmission system.
  • Creation of Village Electricity Infrastructure (VEI) for electrification of all unelectrified villages/habitations and provision of distribution transformer(s) of appropriate capactity in every village/habitation.
  • Decentralized Distributed Generation (DDG) and Supply System form conventional sources for villages/habitations, where grid supply is not cost effective and where Ministry of Non-Conventional Energy Sources would not be providing electricity through their programme(s).

This scheme inter alia provides for financial assistance for electrification of all unelectrified Below Poverty Line (BPL) households with 100% capital subsidy.


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