Quick Review of Major Initiatives Taken With a View to Improve Power Sector in 2013-14

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Indian Power Sector has seen quite a good number of initiatives that are expected to yield fruitful results in improving the operational statistics. It included initiatives from foreign direct investments, fuel supply agreements, power purchase agreemtns, coal block allocations, etc. A quick overview of the initiatives taken in the power sector during the year 2013-14 is presented below.


Automatic approval for foreign direct investment
  • Automatic approval (Reserve Bank of India [RBI] route) for 100 per cent foreign equity is permitted in generation, transmission and distribution, and trading in the power sector without any upper ceiling on the quantum of investment. The government on 22.08.2013 notified its revised position on foreign direct investment (FDI) cap for power exchanges registered under Central Electricity Regulatory Commission (CERC) Regulations 2010 as 49 per cent (26 per cent FDI+23 per cent foreign institutional investment [FII]) through automatic route.
Signing of fuel supply agreements
  • The Cabinet Committee on Economic Affairs (CCEA) in a meeting held on 21 June 2013 issued a directive to the Ministry of Coal/Coal India Limited to sign fuel supply agreements (FSAs) for a total capacity of 78,000 MW, including tapering linkage, which are likely to be commissioned by March 2015. With concerted efforts made in this regard, FSAs have been signed for 160 units totaling capacity around 74,000 MW.
Allocation of new coal blocks to the NTPC
  •  The National Thermal Power Corporation (NTPC) has been allocated four coal blocks (Banai, Bhalumuda, Chandrabila, and Kudanali-Laburi) in August 2013 for power projects of 8460 MW.
Pass-through mechanism
  • Pass-through mechanism for the concluded PPAs has been approved by the CCEA (14,000 MW-Case I and Case II post 2009 plants) in June 2013.
  • The CERC/State Electricity Regulatory Commissions (SERC) have been advised to consider the request of individual power producers in this regard as per due process on a case-by-case basis in public interest. The appropriate commission has been requested to take immediate steps for the implementation of this decision of the government.
Incorporation of PPA condition for coal block allocation
  • The Ministry of Coal has issued letters to independent power producers (IPP) and state governments for incorporating the PPA condition at the time of executing mining lease with IPPs for coal block allocation so that the benefits of low cost coal can be passed on to the consumers.
Independent Coal Regulatory Bill
  • The Independent Coal Regulatory Bill has been approved by the Cabinet on 27 June 2013. The Ministry of Coal introduced the Bill in Parliament in December 2013. An executive order for setting of coal regulation has been issued by the Ministry of Coal.
Third-party sampling and quality control mechanism
  • The Ministry of Coal/ Coal India Limited agreed to third-party sampling at loading points to address the issue of coal quality in October 2013. A Coal India Limited (CIL)-appointed agency for third-party sampling has been operational w.e.f. 1.10.2013.
Source: Economic Survey 2013-14

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