The Reserve Bank of India’s circular of February 12, 2018 is under attack. The circular directs all the lenders to identify incipient stress in loan accounts, immediately on default, by classifying stressed assets as special mention accounts (SMA) under three categories depending upon number of default days ie 1 to 90 days. The private power generator companies are before the Allahabad High Court. The centre is in favour of relaxing the RBI norms. Relaxing certain provisions of the RBI circular for the power sector is not a big issue at the moment. It can be done. There is no harm even to include some other sectors as well.
But, there has been adhocism in the government’s policy. After the centre had opened the power sector to private producers, they should have allocated fuel (coal) in a transparent manner without any discrimination with the projects built by centre / state sectors. It is seen that government allocates coal blocks to states and central PSUs on nomination basis, while the private sector generators have to buy the coal through competitive process, thus disturbing the level-playing field.
Already too much damage has been done to the power sector through such adhoc policies. The sector needs long term solution and that would come only when the centre & states join hands and allow “One Nation, One Tariff” policy. Under this scheme, government should fix cost based tariff for all the generators, irrespective of the type of fuel they use. And the entire power should be hooked to a big pipe, offering a single tariff to discoms. But, for this, some dedicated group has to be created in the same manner as Goods and Services Tax (GST) issue was handled. Experience gained in handling GST issue can help in reaching out with a consensus solution for the power sector in a short period. Read our cover story.