In a recent interaction of the Finance Minister, Pranab Mukherjee with the Ministry of Coal (MoC) and the Ministry of Power (MoP), it was noted that for the development of the power sector in the 12th plan, participation of the private sector was critical if the huge intended infrastructure investments to the tune of $ 300 billion are to be mobilized.
Mukherjee observed that the participation of the private sector was essential not just from the viewpoint of supplementing the state's efforts in building infrastructure, but also lowering of costs with the introduction of better technologies. Therefore, in order to attract power sector participation, the government has put in place a 'strong and coherent' legal and regulatory framework.
Accordingly, the aforesaid initiatives, according to the Minister have in fact been successful in attracting private investment in power sector which so far has added up to roughly Rs 15000 crore, with an increase in power generation capacity from 4% in 1990 to 22% in 2011.
Also, performance has been much better in the 11th plan, as the sector managed to achieve a 185% capacity addition when compared with the 10th plan, even as 2.5 times the capacity is expected to be added over and above that added in the previous plan period.
However, the Finance Minister also identified the major problems facing the power sector in the county today. These are fuel availability, issue of various clearances, particularly, environment and forest clearances, commercial viability and financial soundness of our distribution utilities, and issues in financing of power projects.
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