India is moving towards a new regime where a power consumer would pay first and then get power supplies, which would eventually deal with the issue of non-payment in the sector, Union minister R K Singh said July 15.
The minister also made it clear that states can give free power to certain sections of society but they would have to pay for it from their own budget.
"That is what we are going to do. We are putting a connect between payment and delivery. You make the payment first and then you will get the power... there is no such thing as free power. You cannot produce power without an investment," Singh said addressing at 20th Annual Day of PTC India here.
He further said, "Power has a cost and somebody has to pay for it. If you want to give free power then go ahead. But you (states) have to pay for it from your budget. That is what we are going to do."
Elaborating about the non-payment which was one of the main reasons for the stress in the power sector, Singh said,"There was a disconnect between sustainability considerations and immediate political considerations in many states.
"People felt, it will pay dividends if you give free power to various segments. They (states) are not willing to actually recover the price of power for political gains. But a system like that is not sustainable. That also shows that government (centre) has not taken steps to ensure that sustainability come to fore."
He was of the view that states cannot have a system whereby they distribute free power and do not collect the price of the power.
He stressed that the basic requirement of sustainability of the sector is, establishing a connection between payment and delivery.
Speaking about coal availability, he said, "Second big thing is that you (power generator) would get coal (supply) without bothering about power purchase agreement. Anybody should be free to set up a generating unit and get coal."
In the existing system, power generators must have long term power purchase agreements (PPAs) with discoms to get coal linkage. This caused stress in the power sector. A large number of operational power plants starved for the dry fuel in the absence of coal.
The minister said, "Why should anybody require PPA to generate power. They can sell in the market. That is the system we are aiming at. That will ensure efficiency and sustainability. That will do away with all the reasons for stress in the power sector. The basic cause of the stress was non-payment and non-availability of coal."