“Minister Scindia sees great potential for US investments and co-operation in the Indian power Sector”

1. Mr Jyotiraditya M Scindia, Minister of State (Independent Charge), Ministry of Power, Government of India visited Washington on July 2, 2013 with the objective of further enhancing India –US partnership in the Power sector. 

2. On the invitation of the Brookings Institution Mr Scindia delivered a talk on “Indian Energy Security in the context of the Power Sector”.  The talk was moderated by Michael Greenstone, Director of the Hamilton Project and Senior Fellow in Economic Studies at the Brookings Institution. Attended by a wide cross section of persons, representing Government, academia, industry and press & media, it enabled an exchange views on a wide range of subjects impacting the power sector in India and the leading role to be played by India in the global context.

3. In his talk, the Minister addressed the issues of growth of the Indian power sector particularly relating to challenges in the context of generation, transmission, distribution and access to electricity.  He explained about the initiatives taken by him in the recent months to address these challenges and how these impact the framework of India US co-operation in power sector in general and renewable energy as well as energy efficiency matters as well as the overarching strategy for low carbon growth and clean energy adopted by India.

4. Mr Scindia emphasized that power sector is especially significant in the Indian context, since apart from meeting India’s energy requirement, it also drives capital investment and resultant growth. He emphasized that the policy of the government in the power sector was structured around the 3A strategy: Availability, Accessibility and Affordability. In this context he stated that India has performed admirably in terms of capacity addition in generation, having added about 50 GW over the period 2007-2012, and expected to add another 118 GW over the next five years, of which renewable capacity would be 30 GW. He informed that strong steps have been taken in the past 7 months to improve fuel availability – coal and natural gas – to the power sector.  The addition of 200GW of total transmission capacity including 66GW in inter-regional capacity and the crucial integration of the Southern grid with the rest of the country by January 2014, will make it the largest integrated transmission network globally.  This will ensure secure operation of the grid. Another key sector touched by him concerned the goal of reducing the Aggregate Technical and Commercial (AT&C) losses which had come down significantly owing to federal support through the Restructured Accelerated Power Development and Reform Project (APDRP) and ensuring access to the people in the villages through the flag ship program – Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY).

5. He spoke at length about the $25bn Financial Re-structuring Plan (FRP) launched recently by the Government of India, aimed at improving the viability of the State power utilities and shifting the onus of funding of power subsidies to the books of the State Governments. He also emphasized various measures concerning energy efficiency and stated that in the past 5 years there had been a savings equivalent of 11,000 MW of avoided capacity and this achievement was set to be surpassed with the target of 12GW for the next 5 years. He referred to other potential areas of India US co-operation relating to transmission technologies, development of large scale hydro power, supercritical technology development for efficient energy production, smart grids and energy efficiency improvement programmes.  Minister Mr Scindia emphasized that he saw great potential for US investments and co-operation in the Indian power sector.

6. The Minister also spoke of the institutional mechanisms set up by him in the Ministry concerning then Ministry Advisory Group comprising private and public sector experts; Bankers’ group, Inter-Ministerial groups with Coal and Environment. In order to ensure time bound follow up of the decisions taken in these Groups, a Dashboard Mechanism had been set up at his level. Several important decisions have been taken such as to assist in finalising the Standard Bidding Documents for competitive procurement of power, issues of financing, coal, gas, environment clearance of hydro projects given untapped hydro potential. Regular interactions with the Forum of Regulators and the Central and State regulatory agencies is also undertaken to ensure timely regulatory intervention to address various matters such as tariff, grid security and power procurement.

7. The participants and the moderator raised issues of sustainability of reforms, the timeframe in which the uncovered portion of the country would be given electricity connectivity, the receptivity of State Governments to the FRP, the competing challenges of power availability and clean energy, the future of renewable in the Indian context and the political economy issues in the context of the on-going reforms.  Mr Scindia addressed the issues raised in the question and answer (Q&A) session in depth and detail which was much appreciated for the fresh and vigorous initiatives taken under the leadership of Minister Scindia.

8. The meeting ended with the Minister expressing his gratitude to the Brookings Institution and the Energy Security Initiative for having organized the interaction and facilitating a comprehensive discussion on the challenges of energy security in the context of the Indian power sector.

Mr Jyotiraditiya M. Scindia, Hon’ble Minister of State for Power (Independent charge) addressed the USIBC power roundtable on 1st July, 2013 at the Harvard Club New York and also addressed members of industry at the dinner reception hosted by the Indian Consul General. The Minister gave a brief overview of the power sector in India. He also stressed on the bilateral ties between India and US which have developed into a global strategic partnership based on convergence on global issues. This convergence stems from the philosophy of freedom especially the freedom of opportunity.

With more than 100 billion US $in trade with a healthy growth of 9 % US is largest trading partner of India. Besides, the US is also the 5th largest FDI investing source in India.  In the power sector, the capacity generation since 1947 has increased from 1342 MW to 230 GW. In so far as transmission is concerned, India’s present inter regional capacity is 32 GW and total transmission capacity of the country is 200 GW. The Southern part of the Indian grid shall be synchronously connected to rest of the Indian grid by January 2014. At that time Indian grid would be largest single grid in operation with inter regional transfer capacity addition of 66 GW. A number of measures have been taken to ensure grid security.

RGGVY and RAPDRP are two ambitious programmes which will help in the last mile connectivity and reduction of AT & C losses. For improving financial health of the DISCOMS, a Financial Restructuring Programme has been mandated. Stringent conditions have been mandated for grant of loan to the DISCOMS.

Several measures have also been initiated for Energy efficiency which includes Standard and Labelling programme, Energy conservation Building code and Bachat Lamp Yojana etc.The Perform Achieve and Trade scheme, in 8 sectors for 478 industries, is a market based mechanism to enhance cost effectiveness of improvements in energy intensive large industries.

Investors expressed interest in various initiatives taken by Minister Scindia and the steps India is taking to attract investors. There is a great degree of transparency and the investors stand assured to the India opportunity for investing in the power sector. An institutional framework has also been put in place such as the Advisory Group formed of members from Pvt. Sector, Industry associations and the government.

Regarding fuel shortage, the Indian cabinet has recently approved a pass through mechanism for imported coal for securing deficit coal supplies. This facility is being offered to the IPPs who would be allowed to import coal which will be pass-through in setting the tariff.  Besides a draft Coal Regulator Bill has also been approved which would address issues of quality and adequate supply of fuel requirements.