Page 2 of 2The additional privileges provided to Ultra Mega Projects when compared to Mega power projects are as follows:
Ø The project developers will get stakes in the newly formed distribution companies consequent to the stipulation that those states which intends to purchase power from Mega Power Projects have to privatize the distribution of towns which are having one million or more population.
Ø The project development charges are born by Power Finance Corporation.As a result of all these concessions being poured in to these projects, in addition to the advantage of economy of scale, the cost of production will be far lower when compared to other projects coming up. But who is there in India, who can invest for equity to the tune of 5000 crores and mobilize at least another 11000 crores as loan for a project? It is crystal clear that GOI is expecting few multi-national corporations and consequently the competition thro’ bidding will be for name sake. So there is every chance of emergence of high tariff for the power produced from these Ultra Mega projects and looting the people of India by minting windfall profits.
States will be forced to purchase the high cost power because of the scarcity prevailing in the states due to the miserable failure in achieving the plan targets. Based on the official claim itself, there is a gap of more than 20,000MW between the revised target (34000MW) and achievement (14350MW) in 10th plan which ends by March 2007. This will be a starting point of the multi-nationals’ direct control over Indian power sector.
GOI is insisting the states to privatize distribution if they want power from the Mega power projects and Ultra Mega Power Projects. In spite of the joint protest by the constituents of SREB against it, saying that this will hamper the capacity additions in generation, MOP had only re-iterated it’s stand on 13-2-06 thro’ a letter stating that this proviso is to ensure payment security.
The latest developments in Orisa disproves this claim. The OSERC was forced to order the Reliance power companies engaged in distribution in Orisa to show cause why their license should not be revoked, since they have defaulted payment of more than 1800 crores to the Orisa transmission company. This proves that how ever big the private company is not a guarantee for ensuring regular payment.
It shows that the states have no say in deciding the nature, size, sites and tariff of these Ultra Mega Power Projects. Also the centre is directing the states to free the private developers from local taxes and duties. In fact all these are real threat to the state’s powers enshrined in the Constitution of India. In practice states powers are unilaterally taken over by the centre to facilitate foreign multinational corporations to dominate the power sector which is a basic infrastructure for the development of the country. Need not that it will not serve our national interest, but this multinational giants will manipulate power tariff and impose heavy burdens on Indian people as the experience we have seen in California and other countries.
So the working committee of EEFI which met at Udagamandalam on 21st and 22nd of May unanimously resolves to demand Government of India the following:
1. The stipulation to privatize distribution in order to get power from Ultra &Mega power projects should be withdrawn.
2. All the state governments should be consulted before fixing and finalizing the sites for Ultra Mega Projects and Central Electricity Authority should be entrusted to analise the techno-economics of the projects. The clearance from the State Pollution Control Boards should be placed before state’s Legislature for clearance.
3. Those states which are purchasing power from Ultra Mega projects should also have a say in fixing tariff rates.
4. A bench mark tariff should be published by Central Electricity Authority in case of each project, the calculation of which should be transparent.