Statutory nods barrier for Indian power sector

Compliance with statutory clearances is the “greatest barrier” for developing power infrastructure in India, where 300 million citizens do not have access to electricity, according to IEA. The Paris-based International Energy Agency (IEA) on Monday also said that the practice of providing free electricity can lead to wasteful use of energy.

“Very few countries have been faced with challenges of the magnitude that confront India in its quest to maintain strong economic growth while providing electricity to its 300 million citizens who currently lack access,” it said. In its report ‘Energy Technology Perspectives’, IEA said that to increase power generation capacity, India should have more effective procedures to resolve in a timely manner the issues related to land acquisition and building on or near protected areas. “Compliance with statutory clearances is the greatest barrier to the development of India’s electricity infrastructure. These have been put in place to recognise the critical importance of community rights, environmental protection and sustainable development in India’s growing economy,” it noted. Some power projects are facing hurdles, especially related to environmental clearances, which has also adversely impacted overall capacity in the country. India has an installed generation capacity of more than 2,40,000 MW.

“A core challenge is that while the FYPs (Five Year Plans) provide a framework, neither the central government nor the Planning Commission itself is in a position to ensure that the stated targets are met. “In practice, due to India’s federal structure, much of the actual work involved is delegated downwards to individual states, with direct engagement and support from central government,” the report said. According to IEA, the Five Year Plans include strategic goals for energy as well as the economy, health, agriculture and industry. “FYPs include measures to improve energy efficiency and increase domestic supply by embracing renewables and nuclear energy,” it added. Making a strong case against doling out free power, IEA said such practices could result in wasteful use of energy.

“Power tariffs could be set at levels that prompt utilities to improve the performance of power generation plants while also allowing for reasonable profits on generation. The practice of providing free or heavily subsidised electricity can lead to wasteful use of energy and should be reviewed,” IEA said. India is not a member of IEA but has close co-operative working relationship with it, as per the agency’s website.

Source Business Line