Government keen on private sector investment in power sector

21 December 2006

Private sector participation in the ultra mega power projects has electrified the government. It has now identified 14 projects in the transmission sector, and expects private investments of over 21,000 crore rupees, reports CNBC-TV18.

The government is enthused by the response of the private sector to the ultra mega power projects. It has now decided to set up a working group under Power Finance Corporation (PFC) to identify 24 sites for merchant power plants.

These power plants will not be based on power purchase agreements with State governments.

Of these 18 will be coordinated by the Rural Electrification Corporation and 6 by PFC. These plants will have a generating capacity of between 500 to 1000 mw each. The government will assist companies to get coal blocks, environment clearances, acquire land and financial closure.

R V Shahi, Power Secretary, says, "If industry responds to this need, they are not going to go through the process of competitive bidding for tariff to be selected as a developer nor do they go to the process of cost plus determination of tariff. But they are taking this on their own. If they do it and fulfill the need they can sell power at a slightly higher rate."