The electrical power market in India

The demand for electric power in India is about 30 per cent greater than the current installed capacity of 93,249 megawatts (MW). The Indian government is promoting extensive reforms in the power sector which will distance the state governments from directly operating the power sector. This reform process involves the creation of an independent regulatory framework, reducing subsidies and restoring the financial stability of utilities. It also involves policy for recovering the cost of electrical tariffs and divesting existing distribution assets to private companies. India's national transmission utility, the Power Grid Corporation of India, will oversee this reform process and will establish a national power grid. Thermal power generation accounts for 79.9 per cent of the total installed capacity, followed by hydroelectric power at 17.7 per cent and nuclear power at 2.4 per cent. The Indian government has scheduled power capacity increases of approximately 56,700 MW, including an added 37,563 MW of thermal power, 18,778 of hydroelectric power and 442 MW of nuclear power. This new capacity will require an total investment of $215 billion. It is expected that nearly 70 per cent of the new capacity will be installed by the private sector. The India Ministry of Power will be responsible for formulating policy, plan new projects for investment, monitor the implementation of new projects, train personnel, and enact legislation for thermal, hydroelectric generation and power transmission and distribution. The Central Electricity Regulatory Commission (CERC) is responsible for regulating electrical tariffs of generating companies in India, regulating interstate transmission and bulk power sales, and help formulate India's electrical tariff policy. Several private sector investment schemes have already been initiated, such as the Mega Power Project Policy, which offers exemptions from customs duties for imported capital investment. The Hydro Power Development Policy promotes the development of new hydroelectric power plants and private investment through independent power producers and joint ventures with Indian partners. The rules governing foreign investment to the power sector were also relaxed in 1998. refs., tabs