Power sector freed from security curbs on equipment imports

In A major relief to domestic power companies importing Chinese equipment, a high-level committee has said that security related instructions for equipment will not apply to the power sector. A meeting of senior officials called by the prime minister’s principal secretary and the national security advisor (NSA) has decided that the two sectors needed to be treated differently. "Given the differences between telecom and the power sector as a whole, restrictions relating to imports in telecom sector would not be required in respect of the power sector ,” an official said.

The meeting was called to review security norms for importing telecom equipment meant for developing Smart Grid System in the power sector. Officials attending the meeting observed that “standalone equipment for plants and power systems do not have associated security concerns.”

The meeting was also attended by the home secretary, the secretary (coordination ) in the cabinet secretariat and senior officials from power ministry and country’s security agencies. The panel, however, stressed the need to introduce secured smart grid systems. “There is a similarity of security concerns in respect of the grid system in the power sector and the telecom sector,” the meeting concluded.

A smart grid system supplies power from the producer to the consumer through a two-way digital technology that can control electrical appliances at homes to save energy . It checks energy theft through smart metering and keeps track of electricity flowing in the system. Based on the feedback from the home ministry, the government decided in April to not allow import of telecom equipment from China on security concerns. Some of government arms have considered extending this restriction to power equipment imports, especially from China.

Besides security apprehensions, a large-scale import of Chinese power equipment has become a threat to the domestic equipment manufacturers . Power firms are importing about 50% of total 92,717 MW power equipment orders placed in the 11th (2007-12 ) and 12th (2012-17 ) Plans. Out of the total imports, the Chinese share is over 35,000 MW.

After domestic manufacturers raised quality concerns, the Central Electricity Authority (CEA) prepared stricter efficiency norms for equipment imports.

Another panel headed by Planning Commission member Arun Maira suggested a 14% duty on Chinese power generation equipment to give a level-playing field to the domestic manufacturers such as Bharat Heavy Electricals (Bhel) and Larsen &Toubro (L&T ). While quality norms are being vetted by the law ministry, a committee of secretaries (CoS) is looking into the duty issue.

Most private sector power firms such as Adani, Reliance Power, Lanco and JSW Energy prefer Chinese equipment as they are cheaper by 20-25 % compared to domestically-manufactured equipment.