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Gireesh Pradhan expected to take over as CERC chairman

According to reports, Gireesh Pradhan, a former secretary at the ministry of new and renewable energy, is expected to take over as the next chairman of the Central Electricity Regulatory Commission, India’s apex power sector regulator.

The power ministry has approved Pradhan’s name and his appointment is now to be approved by the appointments committee of the cabinet (ACC) headed by Prime Minister Manmohan Singh.

“The ministry has approved his name. It will now go before the ACC,” a government official said, requesting anonymity.

Pradhan, a 1977 batch Maharashtra cadre former Indian Administrative Service (IAS) officer who earlier served in the power ministry as joint secretary, additional secretary and special secretary, will be the regulator at a time when the sector is undergoing a crisis with several contentious issues before the commission.

While Pradhan declined to comment, several government officials aware of the development confirmed it.

The quasi-judicial CERC consists of a chairperson, three full-time members, and the chairperson of the Central Electricity Authority as an ex-officio member. The members, along with the chairman, have the rank of secretary to the government of India.

According to a report of the parliamentary standing committee on energy, which was presented on 27 August, CERC has stated that it is facing constraints because of the lack of autonomy due to issues such as staffing, operationalization of a separate fund and flexibility in addressing the needs for skill building.

There is a shortage of manpower in the commission with the sanctioned staff strength of only 80, which are filled through deputations from other government departments.

Some of the issues before the commission include the vexed issue of allowing compensatory tariff to Tata Power Co. Ltd and Adani Power Ltd for the electricity generated from their imported coal-based projects in Gujarat as recommended by a panel set up for the same.

CERC’s landmark decision on compensatory tariffs would help developers to charge higher prices for electricity generated by their plants to offset losses incurred on account of an increase in the price of imported coal.

“We couldn’t have pronounced judgements on important petitions and issues in the absence of a chairman,” said a CERC official, who declined to be named.

The other issues involve tightening the frequency band for the country’s national grid to avoid a blackout such as the one that affected several states on 31 July and 1 August 2012, and caused an estimated $2 billion in losses.

Pradhan’s stint as a regulator comes in the backdrop of India’s power sector enduring an economic downturn and high borrowing costs; a funding crunch amid delays in land acquisition and project approvals such as environmental clearances; lack of power purchase agreements, and fuel shortages.

India has a power generation capacity of 225,793.1 megawatts (MW).

The power ministry has been trying to revive interest in the sector and has given a bailout plan for coal-fuelled power projects by allowing power generation utilities to import coal on their own or through state-owned Coal India Ltd, and pass on the extra cost as tariff increases to help restart stalled power projects. It is similarly working on a plan for gas pooling of domestic natural gas with imported liquefied natural gas.

However, analysts are still sceptical.

“ICRA expects the overall absolute level of subsidy dependence for power distribution companies (discoms) on an all-India basis to increase to an estimated Rs.60,000 crore for the 12-month period ending March 31 2014, despite the positives that come along with the implementation of the Financial Restructuring Package (FRP) and overall cash flow/liquidity profile for the utilities which is expected to improve over the next two-three years as also the fact that Cabinet Committee on Economic Affairs’ (CCEA’s) approval for fuel supply mechanism would allow pass-through of cost for imported coal,” said consulting firm Icra Ltd in a report released on Wednesday.

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