India woos foreign investment

The Indian power minister has called on the finance minister for the abolition of import duties on equipment for private power plants. Currently only “mega” power plants specifically identified by the government enjoy the facility.

India has been trying to woo private and foreign investors to build power generation under an economic reform programme started in 1991.

The finance minister has been asked to encourage IPPs with fiscal incentives, and if necessary impose a duty on fuel rather than on capital goods. The minister said the government was moving fast in its steps to ensure financial arrangements to build power plants.

All states were also expected to appoint independent power regulators by March 31, 1999. The state level regulators are expected to oversee a tariff regime expected to strike a balance between consumer needs and financial viability of power plants.

The World Bank recently approved the first in a series of loans totalling $1bn to transform Andra Pradesh`s power sector. The loans will be made over eight years and will help Andra Pradesh make its power sector more economically viable.