Financing the power sector projects:
Massive investment is required for the targeted expansion of the sector. It has been estimated at Rs. 9 lakh crores in the further 10 years. Since power is the most critical infrastructure, public sector investments at the central level and state level both have to be stepped up. Public sector investments might not be adequate for meeting the total investment needed. Thus, the policy envisages in which a sizeable part of investment would require to be brought in from the private sector. Public investment would be focused on public service obligations like increasing access to electricity and supply to small and marginal farmers.
To make the sector viable and also attractive for fresh investments, the policy emphasizes the need of ensuring that the generating companies, transmission and distribution licensees receive payments due to them. For bringing in larger private sector investments, NEP calls for taking steps such as
- Encouraging competition in various segments;
- Procurement of power by competitive bidding; and
- Special mechanisms for encouraging private sector investments in transmission.
NEP also envisages in which some part of new generating capacities, about 15%, might be sold outside by long term power purchase agreements for encouraging competition.