Emergency Transition plan for India's energy sector to save $27bln annually.

1. Twin Market Solution to solve
India’s Energy Sector
3 steps for transition to free markets
while honoring current contracts
24th June 2014
By Vishal Gupta & Team24/06/14 by Vishal Gupta & team. 1

2. Indian Power Sector faces $27 bln
annual loss – World Bank
Fuel
(mostly Coal)
• not available
Generation
•big losses
•(Free Market)
Distribution
• Can’t buy
• No money
Government
Controlled
This does not include the resulting GDP loss of the country!
24/06/14 by Vishal Gupta & team. 2

3. Who needs to do What ?
• All natural resources belong to Center including
Coal. (Article 297) – Issue right of way to
companies (to create free market).
• Promise environment restoration cost
NDC
• All coal needs to be traded on electronic
exchange and futures.
• All coal cost includes environmental restoration
cost.
Ministry of
Coal
• Compulsory universal obligation to supply
electricity till open access granted.Ministry of
Power
24/06/14 by Vishal Gupta & team. 3

4. Two Separate Markets for Generators
Old Contracts
• Fixed price fuel (coal)
• Fixed price supply
New Contracts
• Free market fuel
• Open access Supply
24/06/14 by Vishal Gupta & team. 4
USO compensation by discoms to consumers
if Open access not made available after 1st April 2015

5. NDC Agenda – Right of Way
(under article 297)
State
Benefits
Coal cost to
include
all kinds of
restoration costs
At-least 50
percent staff has
to be local.
State Tax
Blocks to be
allocated at no
cost on sales
contracts in
futures market
24/06/14 by Vishal Gupta & team. 5

6. MOC Agenda
Coal compulsory electronic trading
All future contracts need to
adhere to market
discovered pricing on
exchanges.
All coal needs to be sold
thru exchanges.
All electricity sold thru
open access needs to
purchase fuel only from
exchange.
Sunset clause for off
market transactions in 3
years.
!st April 2016 IPPs have
choice to short close their
off-market fuel supply
agreements
OpenAccess
RegulatedContracts
24/06/14 by Vishal Gupta & team. 6

7. MOP Agenda – USO Compensation or
Give Open Access
Right to paid Power (basic human need)
- universal service obligation (USO)
State to provide open access or
compensate (USO) in bill.
1st April 2015
Free Market
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8. Transition to Free Markets
Coal
Trading &
Futures
Open
Access
USO
Penalty
Article 297
Center own all
Resources
1st April 2015
deadline
1st April 2016
Transition opportunity for locked IPPs
States save electricity deficit
Earn Taxes, generate jobs
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