Power Ministry to Amend Laws Making PPAs & RPOs Mandatory

The Indian government is expected to soon amend laws making obligations under power purchase agreements (PPA) statutory binding, to ensure that all power distribution companies (DISCOMs) have PPAs to cover 100 percent RPO requirement.

This announcement was made by R.K Singh, the Minister for Power during an event held by the Associated Chambers of Commerce & Industry of India (ASSOCHAM India) in New Delhi. “I have called a meeting of energy ministers of all states on November 10-11 –  I will tell them that I am going to make obligations under PPAs statutory binding, that all DISCOMs must have PPAs to cover 100 percent of requirement, and there will be penalties for not paying electricity bills on time,” said R.K. Singh, according to an ASSOCHAM release.

The Minister also said that he will tell all state energy ministers that there must be a limit to cross-subsidization in tariffs to make the industry competitive enough. “If you want to give subsidies to any sector, you do it through Direct Benefit Transfer (DBT) so that efficiencies and inefficiencies of DISCOMs are clear,” added Singh.

Highlighting that he has a very clear roadmap for reforms in the power sector, Singh said that the government will make it certain that payment of electricity bills is made on time by implementing smart metering and pre-paid metering.



“I am also going to initiate penalties if power bills are not paid promptly and renewable purchase obligations (RPOs) will be obligatory – it will be a statutorily legal compulsion because we are not going to go back on our commitments made to the world and international community that 30 percent of our power will be from green sources of energy,” added Singh.

The Ministry of Power will separate carriage and content, which will happen in the next amendment and that would bring-in more competition in distribution which shall bring in more efficiency. “We have proposed to bring that in the amendments which we are contemplating in the Electricity Act, where we will deal with the issue of PPAs and RPOs,” elaborated Singh.

On the hydro policy Singh said, “A draft has been presented to me, and once it is refined, we will send it to the cabinet.” He will try to get it passed in the winter session of Parliament. He also said that power demand in India is going to grow because coverage is going to expand and it is going to be universal. “We are connecting all villages by this December, though the target is for March.”

Singh further said that green energy is going to gradually edge out fossil fuels as the primary energy source. He however said that it would require investments in technology, grid balancing, green corridors, and peaking power. “By and large we see electricity emerging as the primary source of energy as electric mobility is more efficient than mobility by petrol or diesel. The only thing required is the prices of battery of storage systems to come down,” said Singh.

He said it will also require investments manufacturing for in storage systems and electric vehicles. “I had called a meeting of all vehicle and storage manufacturers and have asked them to start investing, because that is the future.”

In a cabinet shuffle in September 2017, Mr. Raj Kumar Singh took over as the Minister of Power. In October, he called a meeting of solar project developers and manufacturers to understand the issues plaguing the sector in India.

Mercom previously reported, due to the lack of enforcement of RPO regulations and the absence of penalties when obligations are not met, many of the state DISCOMs (distribution companies) are not complying fully with their RPO targets.

Image credit: Office of R.K. Singh