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Concern over geographical imbalances of power

Hydro power promoters looking for secure investment in India to develop the country’s vast power potential, have received mixed news. The power regulatory bill has made it through parliament successfully, but two key provisions have been dropped. Indian Power Minister, P R Kumara-mangalam has diluted the legislation by deciding to omit: •That no category of power consumers shall be charged less than 50% of the average cost of the supply of power.

•That each state shall set up its own regulatory commission within three months of the passing of the Bill. (The revised Bill leaves it up to the state government to decide if and when it will set up its commission).

Observers feel that omission of these two important parts of the original Bill would largely negate its objectives of depoliticising the process of fixed power tariffs by putting it in the domain of an independent regulatory body, enhancing the confidence and security of power promoters, and improving the financial health of State Electricity Boards.

An undesirable effect of the revised legislation would be that hydro power promoters, along with other IPPs, may prefer to go to states which have set up their regulatory commissions — Orissa, Haryana and Andhra Pradesh have already done so or are in the process of doing so — and keep away from non-complying states, leading to geographic imbalances of power development.