Associated Chambers of Commerce and Industry of India voices concern over Karnataka’s power supply notification
Rakesh Kumar Kubde
February 29th, 2012

The Associated Chambers of Commerce and Industry of India (Assocham) has expressed concern over the notification issued by the Karnataka government forbidding power suppliers to distribute outside the State.

The industry body said this action by the State Government is creating a major hindrance to the implementation of open access regulation in the country.

“The State Government must review its decision and not reward the power producers with disincentives,” said Mr D.S. Rawat, Secretary-General, Assocham, in a statement. “Considering the extent of power shortages across the country, instead of invoking Section 11, Section 37 or Section 108, forbidding power exporters to supply power outside Karnataka, the State distribution companies must plan power procurement in advance and issue tenders for procuring power,” said Mr Rawat.

In its preamble, the Karnataka Government has notified that the demand for power will rise by about 10 per cent to about 200 million units and the only option available is to tap the power exported to other States.

Such notifications are not a feasible solution to the long and mid-term power purchase agreements.

Besides, if such a scenario persists it will severely hit growth and development process in the power sector and power-deficit states such as Andhra Pradesh, Madhya Pradesh, Maharashtra and Punjab in all probability might soon follow suit, cautioned Assocham.


“Even the Union Ministry of Power had advised the State utilities in the past to use this provision sparingly but the State Governments are not heeding to the Ministry’s advisory, thereby, creating stumbling blocks to open access,” said Mr Rawat.

Stiff resistance from State-owned distribution companies to allow migration of consumers and their apathy to allow open access, irrational policy, and the Government’s inability to absorb cost to serve liabilities together with the absence of independent system operator like in aviation sector are certain reasons, due to which open access remains a mirage.


Out of the total 12,366 mega watts (MW) installed capacity of power utilities in Karnataka as on August 31, 2011, with a share of about 34 per cent private sector accounted for about 4,241 MW.

Besides, the Karnataka Udyog Mitra invited participation from private power project developers to set up merchant power plant to generate about 900 MW and to set up 2,100 MW of gas-based generation projects through bid route.

Thus, considering the role of private sector in future capacity addition, Assocham has strongly recommended the State Government to encourage private investments through policy and regulatory initiatives.

“The open access in power sector is the need of the hour, besides the policies must be streamlined to open up the power market to ensure that consumers get power at competitive rates,” said Assocham.
Source: BL

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