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New power policy from Indian government

The newly formed Indian government has announced the first part of its power policy. The policy does not cover hydro power to any great extent because, according to India’s new Power Minister, R Kumaramangalam, drafting of a new policy is currently taking place. However other policy measures which will have a bearing on the future development of Indian hydro power were disclosed on 26 April.

Among the measures, the Indian government will establish Electricity Regulatory Commissions (ERCs) at central and state levels within the next three months. They will have the authority to set tariffs, issue licences and regulate the power sector, taking the responsibility away from the government. A central budgetary support of Rs3B will also be given to the government-owned Power Finance Corporation to allow it to extend concessional loans for the renovation and modernisation of existing hydroelectric and thermal power plants.

With regards to the selection of private power projects, a new policy will phase out the MOU process as soon as possible and replace it with competitive bidding.

Kumaramangalam also announced that the government hopes to push through a Bill in the Indian Parliament as soon as possible to privatise the country’s power transmission system.