Suresh Prabhu panel on energy suggests opening up coal sector

New Delhi, Dec 22:

The advisory group on integrated development of power, coal, and renewable energy has suggested opening up the coal sector towards supplementing production by state miner Coal India Ltd (CIL).

CIL currently has near-monopoly accounting for 82 percent of domestic coal production.

“The advisory group headed by Railway Minister Suresh Prabhu has suggested that opening up of the coal sector may be necessary, to supplement in a significant way, the domestic production by Coal India and a few other companies,” the power ministry said in a statement here Monday.

The group has also made suggestions on, among others, the coal block auction process, rationalization of coal linkages, for urgent action on coal linkages to commissioned power plants, and for railway infrastructure from mines to main railway system to be developed through joint ventures organised by CIL, it added.

Various suggestions of the group, for instance on the auction of mines, already find a place in the ordinance on coal blocks auctions notified by the government to resolve issues arising from the Supreme Court’s September cancellation of allotments of 204 blocks made between 1993 and 2010.

The court held that these allotments had been made in an “ad hoc” and arbitrary manner.

The ordinance, replaced by a bill passed by the Lok Sabha earlier this month, which outlines the procedure for auction of cancelled coal blocks includes an enabling provision for future commercial mining by private companies.

On the power sector, the group’s recommendations include making changes to the Electricity Act, the tariff policy and the Standard Bidding Documents, and the urgent need for distribution sector reforms, including privatisation and public-private participation (PPP) in distribution, the statement said.

The group’s recommendations find a place in the amendments to the Electricity Act, 2003, tabled in the Lok Sabha Friday by the government, initiating the second phase of reforms in the power sector.

The salient changes proposed are aimed at enhancing grid safety, unbundling the distribution sector, promoting renmewable energy and tariff rationalisation.

Within a given area, multiple distribution companies would be licenced to operate and offer power to consumers.

“To achieve efficiency and for giving choice to consumers through competition, concept of multiple supply licensees is proposed by segregating the carriage from content in the distribution sector, while continuing with the carriage (distribution network) as a regulated activity,” the power ministry said.

While there will be a government distributor to ensure that power is provided to financially weaker sections, competition and a private sector role is proposed through these changes.

The Electricity (Amendment) Bill, 2014, also incorporates many of the group’s suggestions for boosting generation from renewable energy sources.

The government proposes to introduce stricter penalties for failing to meet renewable purchase obligation (RPO) targets.

Under the RPO system, the state power distribution companies have to mandatorily purchase electricity generated through renewable energy sources during the year.

The proposed changes will also introduce the renewable generation obligation (RGO), which will make it compulsory for thermal power producers to generate electricity through renewables.

On rationalising tariffs, the bill envisages timely filing of tariff petitions by utilities and their disposal by the concerned regulator. (IANS)