POWER SECTOR

August 2018

© THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

Disclaimer

Due care has been taken to avoid errors or omissions in this publication. In spite of this, er ors may

still persist. Any mistake, er or or discrepancy if noted, may be brought to the notice of the Institute,

which shal be taken care of in next edition.

The Institute shall not be responsible for any loss or damage resulting from any action taken on the

basis of the contents of this publication. To avoid any doubt, it is suggested that the reader should

cross-check the contents of this publication with original Government notifications.

This industry specific research report is for wide circulation among experts to receive valuable suggestions and necessary supports for further improving the manuscript. Experts are encouraged to

email their suggestions and contribute any material which they think could value add the manuscript

to research@icsi.edu.

The Section 3, “Legal Framework” is indicative only.

Published by :

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Printed at: Indian Offset Press/August 2018

ii

PREFACE

In the liberalized economic policy regime, the corporate sector has been assigned a

major role as the driver of growth and development of the Indian economy. This has

resulted in a number of changes, especial y in the regulatory framework applicable to

specific industry sectors. As an economy is consist of different industries like agriculture,

service, engineering, manufacturing etc., it provides impetus to the economy i.e.

employment generation, production of goods and services, income distribution in the

whole economy.

With the intent to further enhance the competitiveness of India’s services sector and

to boost productivity with the creation of new employment opportunities, the Central

Government has focused attention on 12 sectors in the economy as ‘Champion Sectors’

i.e., IT & ITeS, Tourism and Hospitality, Financial, Accounting and Finance, Transport and

Logistics, Construction and Related Engineering, Communication, Education, Medical

Value Travel, Audio Visual, Legal and Environmental.

As part of its support to government’s policy initiatives, the Institute has started an

initiative by projecting Company Secretary as ‘Corporate Saviour’- a person who can

be relied upon by stakeholders i.e., Corporates, Promoters, Shareholders, Government

and Regulators.

With this basic objective, the institute has initiated the process of developing industry

specific knowledge through research, creating awareness among the members about

the contribution the Company Secretary can make in specific industry, capacity building

of members in the specific industry, securing recognitions for members in specific industry

sector, and sensitisation of regulatory authorities about the contribution the Company

Secretaries can make in specific industry.

For conducting the detailed analysis in a structured manner, a format is designed with

four sections, Section-I covering the industry profile, Section-II Business Scenario, Section-III

legal framework and Section-IV Contribution of Company Secretary in employment and

in practice. The research publications in all the industry sector are based on exploratory

research.

I wish to express my sincere thanks and gratitude to CS Ahalada Rao V, Vice-President, the

ICSI for his efforts in guiding and finalizing industry specific publications.

iii

I also appreciate Dr. Prasant Sarangi, Director (Research), the ICSI-Research Cell for doing in-depth study of Power Sector and bringing out this research publication, under the

guidance of CS Sonia Baijal, Director, Professional Development, Prospective Planning

and Studies and Dr. S.K. Dixit, Mentor, Research Cel .

I am sure this research publication will prove to be of immense value to professionals,

corporates and researchers. The research is an ongoing process, and I welcome the

readers to give suggestions to make this research publication more comprehensive.

I wish all the readers a happy reading

New Delhi

CS Makarand Lele

Date: August 23, 2018

President

The Institute of Company Secretaries of India

iv

TABLE OF CONTENTS

Section No. Title of the Section / Sub Topics

Page

Number

1

Introduction

1

1.1 Introduction

1

1.2 The Energy Sector Bird’s Eyeview

1

1.3 Classification of Energy Sector

2

2

Business Scenario

5

2.1 History

5

2.2 Business Scenario

6

2.3 The Way Forward

12

2.4 International Linkages

21

2.5 Power Sector Reforms

23

2.6 National Electric Plan

24

2.7 National Offshore Wind Energy Policy, 2015

25

3

Legal Framework

26

3.1 Industry Type

26

3.2 Applicable Laws

26

3.3 Specific Acts Applicable

28

3.4 Relevant Regulations

28

3.5 Administrative Framework

29

3.6 Concerned Tribunal

31

3.7 Business Players

31

3.8 Governance

31

v

4

Contribution of Company Secretary

33

4.1 Introduction

33

4.2 Company Secretary in Employment

35

4.3 Company Secretary in Practice

37

Bibliography

38

vi

SECTION 1

INTRODUCTION

1.1 INTRODUCTION

Energy is an essential input for economic development and improving the quality of

life. Power being one of the most critical components of infrastructure is crucial for the

economic growth and welfare of nations.

India’s power sector is one of the most diversified in the world. Sources of power generation

range from conventional such as coal, lignite, natural gas, oil, hydro and nuclear power

to viable non-conventional sources, such as wind, solar, and agricultural and domestic

waste. Electricity demand in the country has increased rapidly and is expected to rise

further in the years to come. In order to meet the increasing demand, massive addition

to the installed generating capacity is required. Power systems across the world are

witnessing significant changes on account of various external factors. Climate change is

leading to increased power demand, which is putting pressure on generators as well as

grid operators.

India ranks third among 40 countries in EY’s Renewable Energy Country Attractiveness

Index. This has been made possible by the government that had been very focused.

Moreover, it has implemented the projects in a line bound period.

India has moved up 73 spots to rank 26th in the World Bank’s list of electricity accessibility

in 2017, as was declared in a conference by the Government of India. In September

2017, the Government of India launched the Saubhagya scheme to provide electricity

connections to over 40 million families in rural and urban areas by December 2018 at a

cost of US$ 2.5 billion.

1.2 THE ENERGY SECTOR BIRD’S EYEVIEW

Energy is a key driver of economic growth. Efficient, reliable and affordable energy is

essential for a sustainable development and inclusive growth of the overall economy.

Due to the rapid economic expansion, India has become world’s fastest growing energy

market. She has surpassed Russia to become the 3rd largest energy consumer in the

world after China and the USA during the year 2015.

1

2

POWER SECTOR

India’s energy security is primarily about ensuring continuous availability of commercial

energy at competitive prices to support its economic growth, and meet the energy

requirements of households with safe, clean and affordable energy. Keeping in view the

vast and ever-increasing energy requirements of the economy, several initiatives have

been taken to increase production and expand of all domestic resources.

1.3 CLASSIFICATION OF ENERGY SECTOR

The energy sector consists of Power sector, Petroleum and Natural Gas, Coal and

Renewable Energy sector in India. There is some or the other inter-linkage among all these

sectors. A brief outline of each sector is as fol ows:

l Petroleum and Natural Gas

l Coal

l Renewable Energy

l Power

Figure-1: Classification of Energy Sector

l Petroleum and Natural Gas:

The Ministry of Petroleum and Natural Gas is concerned with the expansion and production

of oil and natural gas (including import of liquefied natural gas), refining, distribution and

SECTION 1 – INTRODUCTION

3

marketing, import, export and conservation of petroleum products. The production of

petroleum products is targeted at 238.075 MMT in 2016-17 as against 231.924 MMT

achieved in 2015-16.

In order to attract FDI in the sector, the policy has been liberalized. FDI for petroleum

refining by CPSEs has been allowed with 49 per cent foreign equity under the automatic

route. It is observed that the inflow of FDI has improved considerably over the years which

could be attributed to the Government’s initiatives.

Oil and Natural Gas Corporation Ltd., engaged in expansion and production of crude oil,

natural gas and value added products was incorporated in 1993 under the Companies

Act, 1956, pursuant to government’s decision to transform the statutory commission

into Public Limited Company, through the Act of the Parliament [Oil and Natural Gas

Commission (Transfer of Undertaking and Repeal, Act, 1993)]. There are other players like

ONGC Videsh Limited (for production and expansion outside India), Oil India Limited (for

business expansion), Gas Authority of India Limited (for natural gas), Indian Oil Corporation

(India’s first flagship national oil Company), Hindustan Petroleum Corporation Limited (with

navratna status), Bharat Petroleum Corporation Limited (integrated oil company) for the

sector’s expansion.

l Coal

The Ministry of Coal (MoC) has the overall responsibility of determining policies and

strategies regarding the expansion and development of coal and lignite reserves,

sanctioning of important projects of high value and for deciding al related issues.

These key functions are exercised through its public sector undertakings, namely Coal

India Limited (CIL) and Neyveli Lignite Corporation Limited (NCL) and Singareni Col ieries

Company Limited (SCCL), a joint sector undertaking of Government of Telengana and

Government of India with equity capital ratio of 51: 49. The overal production of coal for

2016-17 was projected at 724.71 MT.

The Geological Survey of India has estimated 308.802 billion tonnes of coal reserves in

India. The reserves have been identified mainly in Jharkhand, Odisha, Chhattishgarh, West

Bengal, Madhya Pradesh, Telengana and Maharashtra. Whereas, the lignite reserves in

the country have been estimated at around 44.59 billion tones. The major deposits are

located in Tamil Nadu, Rajasthan, Gujarat, Kerala, West Bengal, Jammu and Kashmir and

in the union territory of Pudducherry.

l Renewable Energy

Ministry of New and Renewable Energy (MNRE) is the nodal ministry at the central level

for all matters relating to new and renewable energy. The ministry has been facilitating

the implementation of broad spectrum programmes including harnessing renewable

4

POWER SECTOR

power, and renewable energy to rural areas for lighting, cooking and movie power, use

of renewable energy in urban, industrial and commercial areas and development of

alternate fuels and applications.

India has an estimated renewable energy potential of about 900 GW from commercial y

exploitable sources viz. Wind – 102 GW (at 80 meter mast heights), smal hydro- 20 GW,

bio-energy- 25GW and solar power-750 GW, assuming 3% wasteland. Under National

Solar Mission, 26 SPV projects of aggregate 330 MW capacity have been commissioned.

Thus, 523 MW Solar PV project and 202.5 MW Solar Thermal Power projects have been

commissioned under the scheme. Under the 100 SPV power plants, 78 projects were

selected to set up 98 MW capacity projects from 12 states. Against this, 71 projects of

total capacity 90.80 MW have been connected to grid. A payment security mechanism

involving a revolving fund of Rs. 486 crore has been put in place to ensure timely payment

to developers in the event of delay/default in payments by the purchasing state utilities.

India has taken a voluntary commitment of reducing emission intensity of its GDP by 33-

35 per cent levels from between 2005-2030. In the recent concluded 21st Conference

of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC)

held at Paris, India committed to achieve about 40 per cent cumulative electric power

installed capacity from non-fossil fuel based energy resources by 2030 with the help of

transfer of technology and low-cost international finance including from Green Climate

Fund (GCF).

SECTION 2

BUSINESS SCENARIO

2.1 HISTORY

Pre-independence India had a power generating capacity of 1,362 MW. Generation

and distribution of electrical power was carried out primarily by private utility companies.

Notable amongst them and still in existence is Calcutta Electric. Power was available

only in a few urban centers to persons of repute. The then vil ages and rural areas were

completely deprived of power supply.

The independent India i.e., after 1947, all new power generation, transmission and

distribution in the rural sector and the urban centers (which was not served by private

utilities) came under the purview of State and Central Government agencies. State

Electricity Boards (SEBs) were formed in all the states.

National Thermal Power Corporation (NTPC), National Hydro-electric Power Corporation

(NHPC) and Power Grid Corporation Limited (PGCL) were set up by the government to assist

in meeting the increasing demand for electricity throughout the country. The electricity

sector is in the ‘concurrent list’, meaning that both, State and Central Governments

participate in the sector’s development. The Ministry of Power in the Central Government

formulates the policies for the power sector.

The Central Electricity Authority (CEA) was established as a statutory authority to develop

a 2nd National Power Policy and also to function as a regulatory authority. As per

government guidelines, all power projects above a certain capacity have to obtain

techno-economic clearance from CEA before they can be implemented. A new Ministry

of Non-Conventional Energy Sources has also been set up to focus on renewable energy

sources to augment the generation capacity of electrical power.

The policy of liberalization announced by the Government of India in 1991 and consequent

amendments in Electricity (Supply) Act have opened new vistas to involve private efforts

and investments in electricity industry. Considerable emphasis has been placed on

attracting private investment and the major policy changes have been announced by

the Government in this regard.

5

6

POWER SECTOR

Table-1 derived below shows growth of Power Installed Capacity since the 6th five year

planss in India.

Table-1: Growth of Installed Capacity During Various Plan Periods (in MW)

End of

Thermal

Nu-

Hydro

RES

Total

Plan

clear

(MNRE)

Coal

Gas

Diesel

Total

Periods

6th Plan

26310.83

541.50

177.37

27029.7

1095

14460.02

00

42584.72

7th Plan

41237.48

2343.00

165.09

43745.6

1565

18307.63

18.14

63636.34

8th Plan

54154.48

6561.90

293.9

61010.3

2225

21658.08

902.01

85795.37

9th Plan

62130.88

11163.1

1134.8

74428.8

2720

26268.8

1628.39

105045.9

10th Plan

71121.38

13691.7

1201.8

86014.8

3900

34653.8

7760.6

132329.2

11th Plan

112022.4

18381.1

1199.8

131603.2

4780

38990.4

24503.5

199877.0

12th Plan

193821.50 25150.38

837.629

219809.5

6780

44963.42

62846.90

334399.83

Source: Annual Report 2015-16, Central Electricity Regulatory Commission.

2.2 BUSINESS SCENARIO

(A) SOURCES OF POWER GENERATION:

Some important sources of energy from where power is generated in India includes:

1. Coal

Coal is one of the important sources of energy in India. Coal deposits are mainly

confined to eastern and south-central parts of the country. Figure-2 derives the

estimated coal reserves in the country available by 2016:

Figure-2: Estimated Coal Reserves in India

Source - Energy Statistics-2017, CSO, Government of India

SECTION 2 – BUSINESS SCENARIO

7

The estimated total reserves of lignite as on 2016 was 44.59 billion Tonnes against

44.12 billion tones by the year 2015.

Figure-3 : Estimated Lignite Reserves in India

Source - Energy Statistics-2017, CSO, Government of India

2. Petroleum

India has a large proportion of tertiary rocks and al uvial deposits particularly in the

extra-peninsular India. Such potential oil bearing area is estimated to be over a

million square km, one third of total area. Statewise estimated reserves of crude

oil in India by the year 2016 are:

Figure-4 : Estimated Crude oil Reserves in India

Source- Energy Statistics-2017, CSO, Government of India

8

POWER SECTOR

3. Natural Gas

The gas reserves are generally found in association with oil fields. The estimated

reserves of natural gas in India across different states as on 2016 stood at 1227.23

Billion Cubic Meters (BCM) as against 1251.90 BCM on 2015. Percent-wise

availability of natural gas in various Indian states are:

Figure- 5: Estimated Natural Gas Reserves in India

Source- Energy Statistics-2017, CSO, Government of India

4. Renewable Energy Sources

There is high potential for generation of renewable energy from various sources-

wind, solar, biomass, small hydro and cogeneration biogases. The figure derived

below shows source-wise estimated potential of renewable power in India by

the year 2016. From the figure it can be seen that solar power constitutes 62%

fol owed by Wind Power at 34 % and others at 4 % (Small Hydro Power-44%,

Biomass Power-39%, bagasse-11% and waste to energy-6%).

SECTION 2 – BUSINESS SCENARIO

9

Figure-6 : Estimated Renewable Energy Sources Reserves in India

Source- Energy Statistics-2017, CSO, Government of India

5. Thermal Power

Thermal power plants use coal, petroleum and natural gas to produce the electricity.

These sources are of mineral origin and also cal ed fossil fuels. Both big and small

thermal power stations are scattered al over the country. Electricity produced by

them is fed into regional grids.

6. Hydro Power

Water-energy is most conventional renewable energy source and obtained from

water flow and water fal ing from a height. Hilly and highland areas are used for

this purpose as there is continuous flow of water.

7. Nuclear Power

This is of course a main source of energy, when the fossil fuel reserves are depleting

very fast. A small quantity of radioactive material can produce an enormous

amount of energy. It has been calculated that one tonne of Uranium would

provide as much energy as by three million tonnes of coal or 12 million barrels of

oil is produced.

(B) POWER SUPPLY GAP:

Table-2 derived below represents energy supply and demand figures from 1997-98 in

India. In the table energy requirement is interpreted as demand for energy over the years.

Whereas, energy availability is interpreted as supply of energy over the years.

10

POWER SECTOR

Table-2: Demand and Supply of Energy over the Years in India

Year

Energy Requirement Energy Availability (MU)/

(MU)/ Demand

Supply

1997-98

424505

390330

1998-99

446584

420235

1999-00

480430

450594

2000-01

507216

467400

2001-02

522537

483350

2002-03

545983

497890

2003-04

559264

519398

2004-05

591373

548115

2005-06

631554

578819

2006-07

690587

624495

2007-08

737052

664660

2008-09

777039

691038

2009-10

830594

746644

2010-11

861591

788355

2011-12

937199

857886

2012-13

995557

908652

2013-14

1002257

959829

2014-15

1068923

1030785

2015-16

1114408

1090850

2016-17

1142929

1135334

2017-18 (Up to

915123

908650

December)

Source: Annual Report 2017-18, Ministry of Power, Government of India.

The figure-7 derived below shows the supply gap in comparison to demand. The blue line

in the figure represents demand and red line represents supply. There is very narrow gap

between how much power is demanded and how much is available.

Excess demand on one hand, may lead to increase in price, consumer dis-satisfaction

and poor quality of product or services. On the other hands, since there demand, is in

excess there is scope of increase in investment in the sector. More and more companies

are expected to enter into the sector through investments or existing companies may

increase investment to grab the opportunity. Increase in investment in the sector may

create better options in the sector.

SECTION 2 – BUSINESS SCENARIO

11

Figure-7: Demand-Supply Gap of Power in India

Source: Annual Report 2017-18, Ministry of Power, Government of India.

Table-3 derived below shows the gap between peak demand and supply in India. From

this table, the shortage of power in India could easily be analysed.

Table-3: Demand and Supply gap of Power During Pick Hours in India

Year

Energy Requirement (MU)/ Energy Availability (MU)/

Demand

Supply

1997-98

65435

58402

1998-99

67905

58445

1999-00

72669

63691

2000-01

78037

67880

2001-02

78441

69189

2002-03

81492

71547

2003-04

84574

75066

2004-05

87906

77652

2005-06

93255

81792

2006-07

100715

86818

2007-08

108866

90793

2008-09

109809

96785

12

POWER SECTOR

2009-10

119166

104009

2010-11

122287

110256

2011-12

130006

116191

2012-13

135453

123294

2013-14

135918

129815

2014-15

148166

141160

2015-16

153366

148463

2016-17

159542

156934

2017-18 (Up to

164066

160752

December)

Source: Annual Report 2017-18, Ministry of Power, Government of India.

Figure derives the gap between peak demand and supply of power over the years in

India. It can be seen from the figure that the gap between demand and supply is wide

during the peak time than what we have been in the figure derived in case of power

supply during normal requirement.

Figure-8: Demand and supply Gap during Pick hours in India

Source: Annual Report 2017-18, Ministry of Power, Government of India.

2.3 THE WAY FORWARD:

The future demand of power depends on various socio-economic factors of the country.

SECTION 2 – BUSINESS SCENARIO

13

Following are some indicators which point out that increase in the demand of the power

in future will be more.

(a) GDP:

With Gross Domestic Product (GDP) growth averaging 7.5 per cent in 2014-15 and 7.1

in 2016-17, India can be rated as among the best performing economies in the world

according to this parameter. Although growth is expected to decline to 6.5 per cent in

2017-18, bringing the 4-year average to 7.3 per cent, the broad story of India’s GDP

growth is going to be significantly higher than most economies of the world does not

alter. The growth is around 4 percentage points higher than global growth average of

last 3 years and nearly 3 percentage points more than the average growth achieved by

Emerging Market and Developing Economies (EMDE). Table-4 derived below highlights

Gross Value Added and GDP growth trends from 2014 to 2017-18.

Table-4: Annual Real GVA and GDP Growth (%)

GVA at Basic prices from

2014-15 2015-16 2016-17 2017-18

Agricultural, forestry and Fishing

-0.2

0.7

4.9

2.1

Industry

7.5

8.8

5.6

4.4

(a) Mining & quarrying

11.7

10.5

1.8

2.9

(b) Manufacturing

8.3

10.8

7.9

4.6

(c) Electricity, gas, water supply &

7.1

5.0

7.2

7.5

Other utility services

(c ) Construction

4.7

5.0

1.7

3.6

Services

9.7

9.7

7.7

8.3

(a) Hotel, Trade, Transport, Storage,

9.0

10.5

7.8

8.7

Communication & services related

to broadcasting

(b) Financial, Real Estate and

11.1

10.8

5.7

7.3

professional services

(c ) Public administration, defense

8.1

6.9

11.3

9.4

and other services

GVA at basic Prices

7.2

7.9

6.6

6.1

GDP at Market Prices

7.5

8.0

7.1

6.5

Source: Compiled from Economic Survey, 2017-18

14

POWER SECTOR

The estimated growth in GVA for this sector during 2017-18 is placed at 7.3 percent as

compared to the growth of 5.7 percent in 2016-17. The key indicators of this sector are the

growth of corporate sector for real estate sector and computer related activities which are

estimated using latest available information on listed companies for the first half of financial

year 2017-18. The combined growth in aggregate bank deposits and credits as on 10

November 2017 was 8.4 per cent. The table -5 and 6 derived below shows the contribution of

financial, real estate and professional services estimated by first advance estimates of Gross

value added by economic activities at basic price at 2011-12 and current price respectively.

Table-5: First Advance Estimates of GVA at Basic Price by Economic Activity

(At 2011-12 prices) (Rs. Crore)

2015-16

2016-17

2017-18

Percentage

(PE)

(Ist AE)

change over

Industry

previous year

2016-17 2017-18

1. Agriculture,

1,617,208

1,696,175

1,732,371

4.9

2.1

forestry & fishing

2. Mining &

324,740

330,485

339,972

1.8

2.9

quarrying

3. Manufacturing

1,872,115

2,019,227

2,112,345

7.9

4.6

4. Electricity, gas,

224,447

240,590

258,672

7.2

7.5

water supply

& other utility

services

5. Construction

879,782

894,668

927,085

1.7

3.6

6. Trade, hotels,

1,989,161

2,143,956

2,329,801

7.8

8.7

transport,

communication

and services

related to

broadcasting

7. Financial,

2,298,798

2,429,638

2,606,602

5.7

7.3

real estate &

professional

services

8. Public

1,284,263

1,430,002

1,564,473

11.3

9.4

administration,

defence and

Other Services

GVA at Basic

10,490,514 11,185,440

11,871,320

6.6

6.1

Price

Source: Compiled from Economic Survey, 2017-18

SECTION 2 – BUSINESS SCENARIO

15

All these demographic and economic indicators are sufficient to prove that the power

sector appears to be very promising in the coming years as it is showing ample scope

for growth.

Table-6: First Advance Estimates of GVA at

Basic Price by Economic Activity

(At current prices)

Industry

2015-16

2016-17

2017-18

Percentage

change over

previous year

2016-17 2017-18

1. Agriculture, forestry

2,175,547

2,372,085

2,438,546

9.0

2.8

& fishing

2. Mining & quarrying

296,253

301,921

341,843

1.9

13.2

3. Manufacturing

2,064,820

2,257,413

2,422,101

9.3

7.3

4. Electricity, gas,

321,651

342,422

368,269

6.5

7.5

water supply & other

utility services

5. Construction

1,006,403

1,041,343

1,109,608

3.5

6.6

6. Trade, hotels,

2,294,364

2,519,999

2,825,708

9.8

12.1

transport,

communication and

services related to

broadcasting

7. Financial, real

2,631,120

2,889,048

3,186,115

9.8

10.3

estate & professional

services

8. Public

1,668,486

1,945,683

2,205,463

16.6

13.4

administration,

defence and Other

Services

GVA at Basic Price

12,458,642

13,669,914

14,897,653

9.7

9.0

Source: Compiled from Economic Survey, 2017-18 and other publications.

Real GDP or Gross Domestic Product (GDP) at constant (2011-12) prices in the year 2017-

18 is likely to attain a level of Rs.129.85 lakh crore, as against the Provisional Estimate of

GDP for the year 2016-17 of Rs. 121.90 lakh crore, released on 31st May 2017. The growth

in GDP during 2017-18 is estimated at 6.5 per cent. With GDP at current prices in the year

2017-18 is likely to attain a level of Rs. 166.28 lakh crore, as against Rs. 151.84 lakh crore

in 2016-17 showing a growth rate of 9.5 per cent.

16

POWER SECTOR

(a) Per Capita Income

The real per capita income (measured in terms of per capita net national income

at constant (2011-12) prices shown in table-1 derived above is one of the important

indicators representing the welfare of people of a country. It is expected to increase from

Rs. 77,803 in 2015-16 to Rs. 86,660 in 2017-18, growing at an annual average rate of 5.5

per cent. In nominal terms it increased by an average of 9.0 per cent per annum from Rs.

94,130 in 2015-16 to Rs. 111,782 in 2017-18.

The per capita net national income during 2017-18 is estimated to be Rs 111,782 showing

a rise of 8.3 per cent as compared to Rs. 103,219 during 2016-17 with the growth rate of

9.7 percent.

The per capita income in real terms (at 2011-12 prices) during 2017-18 is likely to attain a

level of Rs. 86660/- as compared to Rs. 82269/- for the year 2016-17. The growth rate in

per capita income is estimated at 5.3 per cent during 2017-18, as against 5.7 per cent

in the previous year.

(a) Population and Urbanization:

The Census of India, 2011 provides the population and urbanization projections by March

2026. If same trend could continue, then by the year 2031 India’s population will reach

by 1,444,110000 and urbanization is projected to increase around 34.6 % to the total

population.

Table-7: Population and Urbanization Projection by the Year 2031

Year

Population

Urbanization

(‘000 persons)

(% to total)

2006

1,112,186

28.9

2007

1,128,521

29.1

2008

1,144,734

29.3

2009

1,160,813

29.6

2010

1,176,742

29.8

2011

1,192,506

30.0

2012

1,208,116

30.2

2013

1,223,581

30.5

2014

1,238,887

30.7

SECTION 2 – BUSINESS SCENARIO

17

2015

1,254,019

30.9

2016

1,268,961

31.1

2017

1,283,600

31.4

2018

1,298,041

31.6

2019

1,312,240

31.8

2020

1,326,155

32.1

2021

1,339741

32.3

2022

1,352,695

32.5

2023

1,365,302

32.8

2024

1,377,442

33.0

2025

1,388,994

33.2

2026

1,399,838

33.4

2027*

1,409,991

33.7

2028*

1,419,472

33.9

2029*

1,428,303

34.1

2030*

1,436,507

34.4

2031*

1,444,110

34.6

Source: Data for 2006-2026 are obtained from Census of India, Population projections

for India and States 2001-2026, December 2006, and all projections are effective by 1st

March of each year. * Projections calculated based upon the above trend.

Figure-9 shows an increasing trend of projected population by the year 2031. However, it

can be observed that the rate of growth will be little smoother in comparison to the rate

of growth observed by the year 2024.

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POWER SECTOR

Figure-9: Population Projections by the Year 2031 (in ‘000 numbers)

Source: The World Bank, 2008, Link- file:///C:/Users/e0786/Desktop/Solar%20Energy/

Residentialpowerconsumption.pdf

Figure-10 shows the projected urbanization by the year 2031. It can be sheen form

the graph that the projected line is steeper with increasing slope. This indicates that

urbanization will increase over the years.

Figure-10: Urbanization by the Year 2031 (in ‘000 numbers)

Source: The World Bank, 2008, Link- file:///C:/Users/e0786/Desktop/Solar%20Energy/

Residentialpowerconsumption.pdf

SECTION 2 – BUSINESS SCENARIO

19

(b) Household Size Projections

Combining the rural/urban household number and size projections allows the number of

households and of people inhabiting these households in urban and rural areas separately

to be computed to 2031. The projections as calculated by World Bank are presented in

the table-8 derived below:

Table-8: Household Size and Urbanization by the Year 2031

Year

Person Per

% of Urban

Year

Person per

% of Urban

household

Households

household

Household

to Total

to Total

Urban

Rural

Urban

Rural

2006

4.3

4.8

27.5

2019

3.9

4.4

30.4

2007

4.2

4.8

27.7

2020

3.9

4.4

30.6

2008

4.2

4.7

27.9

2021

3.9

4.4

30.8

2009

4.2

4.7

28.1

2022

3.9

4.4

31.0

2010

4.1

4.6

28.4

2023

3.9

4.4

31.2

2011

4.1

4.6

28.6

2024

3.9

4.3

31.5

2012

4.1

4.6

28.8

2025

3.9

4.3

31.7

2013

4.0

4.5

29.0

2026

3.9

4.3

31.9

2014

4.0

4.5

29.2

2027

3.8

4.3

32.1

2015

4.0

4.5

29.5

2028

3.8

4.2

32.4

2016

4.0

4.5

29.7

2029

3.7

4.2

32.6

2017

4.0

4.4

29.9

2030

3.7

4.2

32.8

2018

3.9

4.4

30.1

2031

3.7

4.1

33.0

Source: Residential Consumption of electricity in India, The World Bank. Link: file:///C:/

Users/e0786/Desktop/Solar%20Energy/Residentialpowerconsumption.pdf

(c) FDI Inflow:

Details of FDI inflow into the power sector over the years are derived in the table -9 below

fol owed by the figure-11. The table shows an irregular trend of FDI inflow into the sector.

FDI inflow was highest in the year 2011-12 amounting 1652.38 US Million $.

20

POWER SECTOR

Table-9: FDI Inflow Into the Power Sector (in US $ Million)

Year

FDI Inflow

Year

FDI Inflow

2000-01

89.42

2009-10

1217.79

2001-02

757.44

2010-11

1271.77

2002-03

59.11

2011-12

1652.38

2003-04

27.09

2012-13

535.68

2004-05

43.37

2013-14

1066.08

2005-06

72.69

2014-15

707.04

2006-07

157.15

2015-16

868.8

2007-08

988.68

2016-17

1112.98

2008-09

907.66

Source: https://data.gov.in/catalog/foreign-direct-investment-fdi-equity-inflows

Figure-11 shows a non-linear trend of FDI inflow into the power sector in the country

between the years 2000-01 to 2016-17.

Figure-11: FDI Inflow Over the Years in Power Sector

Source: https://data.gov.in/catalog/foreign-direct-investment-fdi-equity-inflows

SECTION 2 – BUSINESS SCENARIO

21

2.4 INTERNATIONAL LINKAGES

India is connected with all neighboring countries electrically through transmission lines.

The extents of inter-relationship between various countries are briefly outlined below:

(a) Nepal - India is connected with Nepal over 11KV, 33KV and 132 KV lines. For

transfer of bulk powers, there is 400 KV Dhalkebar (in Nepal) – Muzaffarpur (in India)

D/C transmission line. Further, kataiya-Kusaha and Raxaul-Parwanipur 132 KV S/C

on D/C lines with Panther conductors have been commissioned in August 2017.

A bilateral MoU for cooperation on electric power trade, cross-border transmission

interconnections and Grid connectivity for the period of twenty-five years has

been signed by both he courtiers in the year 2014. A Long-Term Integrated Plan

for transfer of power between both courtiers has been prepared by the Joint

Technical Team (JTT) for four years time frame i.e., years 2018-19, 2021-22, 2025

and year 2035.

(b) Bhutan - Both the countries have existing arrangements for about 1500 MW power

from TalaHEP (1020 MW), Chukha HEP (336 MW) and Kurichu HEP (60 MW) in Bhutan

to India through 400KV, 220KV and 132 KV lines. Some other agreements with

Bhutan is already in operation for sharing electric power between the two courtiers.

The bilateral Indo-Bhutan energy cooperation signed in 2006 aims to strengthen

energy security, promote stable energy markets and manage Green House Gas

Emissions. About 1400 MW power from the existing hydro projects in Bhutan is

being imported to India.

(c) Bangladesh - Both the courtiers are linked through Baharampur (India) –Bheramara

(Bangladesh) 400 kv D/C lines and 550 MW HVDC back-to-back terminal at

Bheramara. In addition, projects like Baharampur-Bheramara 400 kv D/C 2nd line,

Katihar (India)-Parbotipur (Bangladesh) – Bornagar (India) 765 kv D/C line, 500 MW

HVDC back-to-back terminal at Parbotipur are under implementation.

Further, as a part of bilateral cooperation, a Memorandum of Understanding

(MoU) on energy cooperation was signed between the governments of both the

coutries in January, 2010. So far 13 meetings of JSC/JWG on Indo-Bangladesh

Cooperation in Power Sector have been concluded over implementation of

various projects.

(d) Sri Lanka - Interactions between the two countries took place for 2*500 MW HVDC

bipole line between Masurai (India)-New Anuradhapura (Sri Lanka) including

submarine cable . A letter of Intent (LOI) was received from Government of Sri Lanka

in June 2017 for developing 500 MW LNG based power project at Kerawalapitiya

22

POWER SECTOR

in place of the coal based power plants at Sampur by a joint venture company

between India and Sri Lanka.

(e) Germany - As a bilateral cooperation, Indo-German Energy Forum (IGEF) has

been established in 2006 for promoting energy security, energy efficiency

including energy conservation, renewable energy, investment in energy projects

and collaborative research and development projects.

(f) Japan - A Government level India-Japan Energy Dialogue (IJED) has been set

up between the two countries. It has been decided to set up five working groups

to deal with power generation, energy efficiency, coal, renewable energy and

petroleum and natural gas and identify areas of col aboration.

(g) The United Kingdom - MoU between the two countries to strengthen coordination

between both the countries was signed in November 2015. Two priority areas

such as (i) utilities of the future, and (ii) energy efficiency have been prioritized.

Issues like research and innovation, inward investment, green finance and utilities

of the future in technology, etc., have been deliberately in discussion between

both the counties.

(h) BRICS - A Memorandum of Understanding in energy saving and energy efficiency

among the ministries and governmental agencies of BRICS was signed in

November, 2015. Several meetings were held where issues related to Clean

Energy Ministerial (CEM), a proposal from the Russian Federation of BRICS, India’s

stand of achieving 40% of its cumulative electric power instal ed capacity from

non-fossil based energy sources by 2030 etc., have been discussed.

(i) International Energy Agency (IEA) - The IEA is an autonomous organization it in

which was set up in response to the 1973-74 oil crisis. India became a partner in

November, 2013.

(j) World Energy Council India - This programme encompasses engagements at

national as well as global level.

(k) Russia - An MoU has been signed between India-Russia on November, 2013 to

exchange knowledge, information and best practices on topics like exchange of

delegations, technical assistance and exchange of experiences.

(l) China - The MoU between India and China in the field of energy efficiency was

signed on 26th November, 2012, for a period of five years, to enhance energy

efficiency in industries and implementation of energy efficiency projects through

Energy Service Companies, Energy management system, increasing energy

efficiency in thermal plants, jointly developing test protocols and standards for

LED, etc.

SECTION 2 – BUSINESS SCENARIO

23

(m) Switzerland - Bilateral agreements has been signed with Switzerland to enhance

the development of integrated design of power sector machineries, technical

assistance in developing building materials-testing infrastructure, design guidelines

and tools for the design of energy efficient residential and public buildings, etc.

(n) The European Union - Bilateral agreement has been signed with the European

Union to enhance the security of energy, its renewable, smart integration and

clean coal and many more.

2.5 POWER SECTOR REFORMS

Some major reforms in the power sector include:

l Twenty-four states viz. Odisha, Haryana, Andhra Pradesh, Uttar Pradesh, Karnataka,

West Bengal, Tamil Nadu, Punjab, Delhi, Gujarat, Madhya Pradesh, Maharashtra,

Rajasthan, Himachal Pradesh, Assam, Chhatisgarh, Uttaranchal, Bihar, Jharkhand,

Kerala, Tripura, Sikkim, Jammu & Kashmir and Meghalaya have either constituted

or notified the constitution of State Electricity Regulatory Commission.

l Joint Electricity Regulatory Commission has been notified for Mizoram and

Manipur.

l Joint Electricity Regulatory Commission has also been notified for Union Territories

(except Delhi).

l Review of the Electricity Act, 2003. In pursuance of provisions of the National

Common Minimum Programme (NCMP) that a review of the Act would be

undertaken, the Electricity (Amendment) Bill, 2005 has been introduced in the Lok

Sabha on 23.12.2005. The provisions of the Electricity Act, 2003 which are to be

amended are as under:

Ø The concerned State Governments and the Central Government shall jointly

endeavour to provide access to electricity to al areas including villages

and hamlets through rural electricity infrastructure and electrification of

households.

Ø To delete ‘elimination’ of cross subsidies as elimination of cross subsidies is

not intended in the near future. The provision for reduction of cross subsidies

would continue.

Ø The police would be able to investigate the cognizable offences under the

Act and that no prosecution shall be instituted for any offence under the

Act except at the instance of the appropriate Government or appropriate

Commission or authorized persons. Special Courts constituted under the Act

will be able to take cognizance of offences without the accused being

committed to them for trial. Appellate Tribunal for Electricity

24

POWER SECTOR

Ø The Central Government has made the Appellate Tribunal for Electricity operational

w.e.f. 21st July, 2005.

Ø The Appellate Tribunal has started hearing appeals against orders of the Regulatory

Commissions/ Adjudicating Officers.

Ø Forum of Regulators Forum of Regulators have been constituted under section

166(2) of the Electricity Act, 2003 on 16th February, 2005.

Ø Ministry of Power launched reform-oriented programme, namely, Accelerate

Power Development and Reforms Programme (APDRP) during 2002-2003.

Ø Ministry of Power signed the Memorandum of Understanding with the states to

undertake distribution reforms in a time bound manner, which includes setting

up of State Electricity Regulatory Commission (SERC), unbundling of State Power

Utilities, metering of feeders & consumers, starting energy accounting & auditing,

securitization of outstanding dues of CPSUs, grid discipline, etc., subsequently, 24

states have constituted SERCs and 20 have issued tariff orders in the direction of

rationalizing the tariffs.

2.6 NATIONAL ELECTRIC PLAN

The National Electricity Plan includes a review of the 12th Plan, detailed capacity addition

requirement during the years 2017-22 and perspective plan projections for the years

2022- 27. A brief summery is outlined below:

l In the 12th Plan, likely capacity addition from conventional sources as per review

carried out as on 31.3.2016 will be 1,01,645 MW against a target of 88,537 MW.

This is about 115% of the target.

l Private players have started playing dominant role in capacity addition in power

sector with 56 % of total capacity addition during 12th plan coming from private

sector.

l There is likely to be considerable slippage in capacity addition in respect of Hydro

and Nuclear (Hydro – 5,601MW and Nuclear -2,800 MW) in the 12th Plan period.

The factors affecting capacity addition in Hydro and Nuclear sectors need to be

addressed urgently to arrest the further decline in generation mix.

l During the 12th plan, capacity addition from supercritical technology-based coal

power plants is likely to contribute around 39% of the total capacity addition from

coal-based plants.

l A capacity addition of 17,930 MW from Renewable Energy Sources has been

achieved during the first four years of the 12th Plan.

SECTION 2 – BUSINESS SCENARIO

25

l Largest ever wind power capacity addition of 3,300 MW has been achieved in

2015- 16. This has exceeded the target by 38%. Also India has registered highest

ever yearly solar power capacity addition of 3,019 MW in 2015-16 exceeding

target by 116%.

l The plan also targeted the issues on reducing demands in various states by 2022,

improve in power efficiency, transmission improvement, proper distribution of

power and improvement in renewable energy sources towards power.

l Policy on Human resource development and enhancing Research and

Development activities are also targeted.

2.7 NATIONAL OFFSHORE WIND ENERGY POLICY, 2015

The Ministry of New & Renewable Energy (MNRE) has been authorized as the Nodal Ministry

for the use of offshore area within the Exclusive Economic Zone (EEZ) of the country and

the National Institute of Wind Energy (NIWE) has been authorized as the Nodal agency for

the development of offshore wind energy in the country and to carry out allocation of

offshore wind energy blocks, coordination and allied functions with related ministries and

agencies. It would pave the way for offshore wind energy development including, setting

up of offshore wind power projects and research and development activities in waters, in

or adjacent to the country, up to the seaward distance of 200 Nautical Miles (EEZ of the

country) from the base line.

Preliminary assessments along the 7600 km long Indian coastline have indicated

prospects of development of offshore wind power. With the introduction of the National

Offshore Wind Energy Policy, the Government replicates the success of the onshore

wind power development in the offshore wind power development. The scheme

would be applicable throughout the country depending upon offshore wind potential

availability.

SECTION 3

LEGAL FRAMEWORK

3.1 INDUSTRY TYPE

Power sector is an integral part of Energy Industry. This sector is inter-related with other sectors in the industry.

Ø Public Limited Company

Ø Private Limited Company

Ø State Electricity Board

3.2 APPLICABLE LAWS

General Laws

Ø The Indian Electricity Act, 1910

l Provided basic framework for electric supply industry in India.

l Growth of the sector through licensees.

l License by State Government

l Provision for license for supply of electricity in a specified area.

l Legal framework for laying down of wires and other works.

l Provisions laying down relationship between licensee and consumer

Ø The Electricity (Supply) Act, 1948

l Mandated creation of SEBs.

l Need for the State to step in (through SEBs) to extend electrification (so far

limited to cities) across the country.

l Main amendments to the Indian Electricity Supply Act

l Amendment in 1975 to enable generation in Central sector.

26

SECTION 3 – LEGAL FRAMEWORK

27

l Amendment to bring in commercial viability in the functioning SEBs –

Section 59 amended to make the earning of a minimum return of 3% on

fixed assets a statutory requirement (w.e.f 1.4.1985) .

l Amendment in 1991 to open generation to private sector establishment

of RLDCs.

l Amendment in 1998 to provide for private sector participation in

transmission, and also provision relating to Transmission Utilities.

Ø The Electricity Regulatory Commission Act, 1998

l Provision for setting up of Central / State Electricity Regulatory Commission

with powers to determine tariffs.

l Constitution of SERC optional for States.

l Distancing of the Government from tariff determination.

Ø The Electricity Act, 2003

The Electricity Bill, 2001 was introduced in Lok Sabha on 30th August, 2001 and was

subsequently referred to the Standing Committee on Energy for examination

and report. The Standing Committee submitted its report on 19th December,

2002. Based on the recommendations of the Standing Committee on Energy,

the Government of India moved certain amendments. The Electricity Bill,

2001 along with these amendments, was passed by Lok Sabha on 9th April, 2003.

The Bill as passed by Lok Sabha was considered and passed by Rajya Sabha

on 5th May, 2003. The Electricity Bil , 2003 as passed by both Houses of the

Parliament received President’s assent on 26th May, 2003 and was notified

in the Gazette of India on 2nd June, 2003.The provisions of the Act except

section 121 were brought into force with effect from 10th June 2003. Same of

the important objectives of the act are:

l Developing the electricity industry.

l Promoting competition.

l Protecting consumer interests.

l Supplying electricity to all areas.

l Rationalising tariffs.

l Ensuring transparent policies regarding subsidies.

28

POWER SECTOR

3.3 SPECIFIC ACTS APPLICABLE

l The Companies Act, 2013

l Atomic Energy Act,1962

l Civil liability for Nuclear Damage Act,2010

l Consumer Protection Act, 1986 and rules there under

l Electricity (Supply) Act,1948

l Electricity Act,2003

l The SEZ Rules

l Electricity Regulatory Commission Act,1998

l Energy Conservation Act,2001

l National Electricity Policy

l National Tariff Policy

l National Thermal Power Corporation Limited, The National Hydroelectric Power

Corporation Limited and The North-Eastern Electric Power Corporation Limited

(Acquisition and Transfer Of Power Transmission Systems) Act, 1993

l Neyveli Lignite Corporation Limited (Acquisition And Transfer Of Power Transmission

System) Act, 1994

l Semiconductor Integrated Circuits Layout-Design Act, 2000

l The Income Tax Act, 1961

l Cost Audit (Report) Rules, 2001

l Cost Accounting Record Rules, 2001

l Payment of Bonus Act, 1962

3.4 RELEVANT REGULATIONS

Ø The JERC (Standards of Performance for Distribution Licensees) Regulations, 2015

Ø The JERC (Procurement of Renewable Energy) Second Amendment Regulations,

2015

SECTION 3 – LEGAL FRAMEWORK

29

Ø Central Electricity Regulatory Commission (Indian Electricity Grid Code) (Fourth

Amendment) Regulations, 2016

Ø Central Electricity Regulatory Commission (Deviation Settlement Mechanism and

Related Matters) (Third Amendment) Regulations, 2016

Ø Central Electricity Regulatory Commission (Terms and Conditions for Dealing in

Energy Savings Certificates) Regulations, 2016

Ø Central Electricity Regulatory Commission (Open Access in Inter-State Transmission)

(Fourth Amendment) Regulations, 2016

Ø Central Electricity Regulatory Commission (Appointment of Consultants) (Third

Amendment) Regulations, 2017

Ø Central Electricity Regulatory Commission (Sharing of Inter State Transmission

Charges and Losses) Regulation, 2010.

3.5 ADMINISTRATIVE FRAMEWORK

There are a mix of executive and regulatory authorities (both at the central and state

levels) that are responsible for regulating the Indian electricity sector.

Ministry of Power, Government of India

The Ministry of Power is primarily responsible for developing electrical energy in India,

formulating policy, and administering legislation with regard to electricity.

Ministry of New and Renewable Energy

The ministry is responsible for formulating policy for the development and deployment of

alternate sources of energy.

Ministry of Environment, Forests and Climate Change

The ministry is responsible for formulating environmental and forestry policies, and the

prevention and abatement of pol ution.

Central Electricity Regulatory Commission (CERC)

This authority is responsible for:

l Regulating tariffs of generating companies that are either:

l owned or controlled by the Indian Government; or

l generate and sell electricity in more than one state.

l Regulating inter-state transmission and determining the tariffs in this regard.

30

POWER SECTOR

l Issuing licences for inter-state transmission and trading.

l Adjudicating disputes involving generating companies or transmission licensees

with regard to the above matters.

l Specifying the grid code having regard to grid standards.

l Specifying and enforcing standards of service by licensees.

l Fixing the inter-state trading margin (if considered necessary).

State Electricity Regulatory Commissions (SERC)

The commissions are responsible for:

l Determining tariffs for intra-state generation, supply, transmission, and wheeling.

l Regulating the purchase and procurement of electricity by distribution licensees.

l Facilitating intra-state transmission and wheeling of electricity.

l Issuing intra-state transmission, distribution and trading licences.

l Promoting co-generation and generation of electricity from renewable sources of

energy.

l Adjudicating on disputes between the licensees and generating companies.

l Specifying the state grid code.

l Specifying or enforcing standards of service by licensees.

l Fixing the intra-state trading margin, if considered necessary.

Central Electricity Authority (CEA)

The CEA is responsible for formulating short-term and perspective plans for developing the

electricity system, and co-ordinates the activities of the planning agencies. The Central

Electricity Authority also specifies:

l Technical standards for construction of electrical plants, electric lines and grid

connectivity.

l Safety requirements for construction, operation and maintenance of electrical

plants/ lines.

l Grid standards for operation and maintenance of transmission lines.

l Conditions for installing meters for transmission and supply of electricity.

Bureau of Energy Efficiency (BEE)

To develop policy and strategies with trust on self regulation and market principles, within

SECTION 3 – LEGAL FRAMEWORK

31

the overall framework of the Energy Conservation Act, 2001 with the primary objective

of reducing energy intensity of the Indian economy. This will be achieved with active

participation of all stakeholders, resulting in accelerated and sustained adoption of

energy efficiency in al sectors of the economy.

3.6 CONCERNED TRIBUNAL

Appellate Tribunal under the Electricity Act, 2003

3.7 BUSINESS PLAYERS

Major Public Sectors

l Power Finance Corporation

l Power grid Corporation of India Limited

l Central Electricity Regulatory Commission

l Damodar Valley Corporation by

l Neyveli Lignite Corporation Limited

l Nuclear Power Corporation of India Limited

l NHPC Limited

l NTPC Limited

l Gujarat Industries Power company Limited

Major Private Companies

l Adani Power

l Tata Power Company Ltd.

l Suzlon

l Reliance Power Limited

l Jaiprakash Power ventures Limited

l JSW Energy Limited

l SJVN Limited

l Torrent Power Limited

3.8 GOVERNANCE

The power industry had been the most regulated infrastructural sector of the economy,

resulting in the industry not keeping pace with economic growth of the country. Lack of

reliable and quality power is a major bottleneck for the speedier growth of the economy.

In no other industry is the need for sound corporate governance system and practices

32

POWER SECTOR

felt as seriously as in the power industry. Poor governance practices have negatively

impacted the performance of power utilities and resulted in the systemic weaknesses.

It is in the management of this sector, of all sectors of the economy, that there is dire

need to introduce good governance system. While the authorities concerned have rightly

recognized such need and have taken far reaching measures, Company Secretaries can

play significant role and make useful contribution in the fol owing areas : O The process

of restructuring of SEBs by segregating of businesses such as generation, transmission and

distribution of electricity.

• Incorporation of Companies under the Companies Act for taking up these

business activities.

• Transfer and vesting of these businesses with the companies under respective

Transfer Schemes.

• Disinvestment of distribution business through various methods. The most suitable

method which has been implemented so far is the joint venture route, in which

management control is given to the private investor through transfer of 51 %

equity. The disinvestment/privatization process requires compliance of various

formalities and extensive due diligence exercise.

• The utilities engaged in the business of transmission and distribution of power are

regulated by the concerned SERC. The Company Secretary in employment

can appear before the Commission. Company Secretaries in practice may

also appear before the Commission if so authorized by the parties to the

proceedings.

SECTION 4

CONTRIBUTION OF COMPANY SECRETARY

4.1 INTRODUCTION

There has been a significant increase in renewable energy capacity in the country

during the last decade. The instal ed capacity of renewable in India was 10,252 MW

as at the end of the 10th plan (i.e., on 31.03.2007) and the same had grown to 24,920

MW at the end of the 11th plan (i.e., on 31.03.2012). With a consistent growth, the

instal ed capacity of renewable energy sources has reached 42,849.38 MW as on

31.03.2016.

The Renewable Energy (RE) potential in India is estimated as 896,602 MW comprising of

748,990 MW of Solar Power, 102,772 MW of Wind Power, 19,749 MW of Small Hydro Power

and 25,090 MW of Bio-Energy. The Government of India, in pursuit of energy security and

for minimizing impact on environment, has been prioritizing the development of RE sector

through its policies and programmes. Wind, Solar and small Hydro are three emerging

renewable energy sources.

The National Solar Mission (NSM) launched in January 2010 has given a great boost

to the solar scenario in the country. As of 31st March 2016, the installed capacity

of Solar power in India was 6,762.85 MW, which is 16% of total Renewable Instal ed

Capacity in India. This Solar capacity is mainly spread across Rajasthan (1269.93

MW), Gujarat (1119.17 MW), Tamil Nadu (1061.82 MW), Madhya Pradesh (776.37

MW), Andhra Pradesh (572.96 MW), Telangana (527.84 MW), Punjab (405 MW) etc.

The installed capacity of Biomass power in India as on March 2016, was 4,946.41

MW, which is 12% of total Renewable Installed Capacity in India. Small hydro power

with capacity of 4,273.47 MW as on March 2016, represents 10% of total Renewable

Installed Capacity in India. The figure Derived below shows targets to meet by the year

2022 in various sectors:

33

34

POWER SECTOR

Figure-12: Target By The Year 2022

Source: Draft National Electricity Plan-2016, Central Electricity Authority

There is huge scope for the individuals to enter in this sector as an entrepreneur. The scope

for consultancy is also high for the Company Secretaries who are in practice. With the

increase in avenues, demand for Company Secretary as legal advisers could emerge.

Research and Development

There are many problems in Indian power sector which are specific to Indian conditions.

Through promotion of R&D, these specific problem areas need to be addressed. The

ministry is giving stress for improvisation of power sector through extensive research. It

is suggested that CEA may act as an interface between Industry, academics and

professionals for this purpose. Experts from Government, dominant players in the field of

generation, transmission and distribution sectors like NTPC, NHPC, BHEL, Power grid, CESC

etc. Research institutions like CPRI, Academic Institutions like IISc/IITs/ NITs and professional

bodies are to be involved.

Company Secretaries in practice could act as research consultants to these agencies.

Those who are interested in research could opt for research-related jobs in the sector.

Human Resource

It has been analysed in the National Electric Plan that power sector requires huge

employment of human resources by 2022 in order to achieve all its targeted plans and

actions. Some important observations are:

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35

Ø Sufficient number of Engineers, Managers and Diploma holders are available in

the country. However, there are gaps in respect of lower level skills like that of ITI.

Ø It is proposed that all Central Sector Utilities, al State Sector Utilities and all IPPs

should create sufficient Training infrastructure and schedule for providing O&M

training as per the norms stipulated in notification of September 2010 issued by

CEA.

Ø CEA has recognized about 74 Training Institutes spread all across the country.

These institutes may be strengthened for Distribution/Lineman training along with

training in renewable sector such as solar, wind etc.

Ø As per National Training Policy each organization should allocate training budget

between 1.5% to 5% of annual salary budget. Training infrastructure for distribution

could be funded.

l Company Secretary could act as a Human Resource expert by providing

necessary guidelines required from time to time and also by helping the

CEA in getting required talents.

l Company Secretary could act as a trainer consultant to the sector by

developing required talents to the sector.

4.2 COMPANY SECRETARY IN EMPLOYMENT

Organizational governance

It is important that robust governance arrangements are in place, are clearly documented

and communicated to the organization. The position of the Company Secretary enables

them to have a holistic view of the governance framework and as a result they are

generally tasked with the responsibility of ensuring that this framework and any supporting

policies and procedures are clearly documented.

Supporting the chairman

The Company Secretary has a duty to advise the Board, through the Chairman, on all

governance matters. Together they should periodically review whether the Board and

the company’s other governance processes are fit for purpose, and consider any

improvements or initiatives that could strengthen the governance of the company. The

relationship between the Company Secretary and the chairman is central to creating an

efficient Board.

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POWER SECTOR

Board and committee processes

The Company Secretary plays a leading role in good governance by helping the Board

and its committees function effectively and in accordance with their terms of reference

and best practice. Providing support goes beyond scheduling meetings to proactively

managing the agenda and ensuring the presentation of high quality up-to-date

information in advance of meetings.

Board development

All directors should have access to the advice and services of the Company Secretary. He/

she should build effective working relationships with all board members, offering impartial

advice and acting in the best interests of the company. In promoting board development

the Company Secretary should assist the chairman with al development processes

including board evaluation, induction and training. This should involve implementing

a rigorous annual Board, committee and individual director assessment and ensuring

actions arising from the reviews are completed. Further, the Company Secretary should

take the lead in developing tailored induction plans for new directors and devising a

training plan for individual directors and the Board. Although these tasks are ultimately

the responsibility of the chairman, the Company Secretary can add value by fulfilling, or

procuring the fulfil ment of, these best practice governance requirements on behalf of

the chairman.

Communication with stakeholders

The Company Secretary is a unique interface between the Board and Management and

as such they act as an important link between the Board and the business. Through effective

communication they can coach management to understanding the expectations of,

and value brought by the Board. The Company Secretary also has an important role in

communicating with external stakeholders, such as investors, and is often the first point

of contact for queries. He/she should work closely with the Chairman and the Board to

ensure that effective shareholder relations are maintained.

Disclosure and reporting

In recent years there has been increased emphasis in the quality of corporate governance

reporting and cal s for increased transparency. The Company Secretary usually has

responsibility for drafting the governance section of the company’s annual report and

ensuring that all reports are made available to shareholders according to the relevant

regulatory or listing requirements.

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37

4.3 COMPANY SECRETARY IN PRACTICE

l There is excess demand in the power sector. It may lead to increase in investment.

Increase in investment may lead to expansion of the sector, hence, opening new

opportunities. Company Secretaries are required to make themselves prepared

to grab the opportunities while arising.

l Preparing case for Arbitration and representation before arbitrators

l Consultation on behalf of companies at NCLT

l Consultation as an expert in providing training to employees

l Consultation in Human Resource related issues

l Consultation in conducting new Research and Development as per requirement

of the company

l Consultation in setting up and smooth functioning of new power sector companies

more particularly in renewable energy sector

l Any other such consultancies that are required from time to time.

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POWER SECTOR

BIBLIOGRAPHY

l Annual Report 2015-16, Central Electricity Regulatory Commission, New Delhi

l Annual Report 2016-17, Bureau of Energy efficiency, Ministry of Power, Government

of India.

l Annual Report 2016-17, Central Electricity Regulatory Commission, New Delhi

l Annual Report 2017-18, Ministry of Power, Government of India.

l Annual Report, 2015-16, Joint Electricity Regulatory Commission, Haryana.

l Central Electricity Authority, Draft National Electricity Plan (Volume-1), Ministry of

Power, Government of India.

l Central Statistics Office, Ministry of Statistics and programme Implementation,

Government of India, Energy statistics, 2017.

l Central Statistics Office, Ministry of Statistics and Programme Implementation,

Government of India, Press Note on First Revised Estimates of national Income,

Consumption Expenditure, Saving and Capital Formation for 2016-17.

l Confederation of Indian Industry, Changing Rules of Indian Power Sector:

Empowering the Economy, Link- file:///C:/Desktop/Solar%20Energy/changing-

rules-of-indian-power-sector-empowering-the-economy.pdf.

l Load Generation Balance Report, 2017-18, Central Electricity Authority, Ministry of

Power, Government of India.

l Ministry of Power, Government of India, Indian Power Sector: Challenges and

Investment Opportunities.

l Power Sector Achievements Report 2016, Department of Industrial Policy and

Promotion, Ministry of Power, Government of India. Link- file:///C:/Desktop/Solar%20

Energy/Power%20Sector%20-20Achievement%20Report-Make%20in%20india-

GOI.pdf

l The World Bank, Draft Residential Consumption of electricity in India: Documentation

of Data and Methodology, back Ground Paper on India: Strategies for Low Carbon

Growth, July 2008.

Document Outline

Contents

Power Sector