ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Private Thermal Power in a Liberal Policy Regime

The extremely liberal regime ushered in by the Electricity Act 2003 allowed a few existingprivate captive thermal generators to make handsome profits, particularly in certain regions with perceived advantages in terms of availability of coal and water. But the majority of proposed projects were abandoned without cost to the communities of the area they were to be located in. Of the rest, only a few are operational with partial capacity, while others are under construction with delayed schedules or have gone into limbo. A critical analysis of the development of private thermal power projects over a decade.

The Electricity Act 2003 and the National Electricity Policy 2005 put in place a highly liberal policy regime for private thermal electricity generators. Licensing was done away with. Techno-economic clearance from the Central Electricity Authority (CEA) was no longer necessary. Generators were provided open access to the transmission network, ownedwith a few exceptionsby state and central utilities. They could supply power to any part of India. Generators were also freed from having to enter into long-term (1225 year) power purchase agreements with distribution companies, which limited profit margins. They could opt for shorter-term contracts as well as sell in the power markets through traders and power exchanges.

The liberal regime resulted in an explosion of interest from private companies. This article follows the development of private thermal power projects over a decade to determine the major impacts of this policy regime and to critique it.

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