HP policy against power sector reforms

While the Centre has been asserting that hydroelectric projects should be awarded only through competitive bidding, the power policy announced by the Himachal Government last week provides for allotment of projects up to 100 MW by the MoU (memorandum of understanding) route.

The policy also goes against the power sector reforms the main objective of which is to bring down the generation cost by creating a competitive environment. In fact, the government of India is in the process of formulating guidelines in this regard. However, the state has come out with its own policy. Further, the experts have been of the view that the projects should be awarded on tariff-based bidding so that the cost of generation to ensure that cost and time over-runs did not increase the cost of generation. As such the policy allowing the MoU route for projects up to 100 MW is a retrograde step which will only push up the generation cost.

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