LEGAL ISSUES IN INDIA’S ENERGY SECTOR

When you enter a dark room, you dispel the darkness by a flip of a switch. A small reflex action-which comes as second nature to us. One fails to realise how much electricity is taken for granted.

As a nation, we are witness to a conflicting situation in our energy sector today- we might be the third largest producer of electricity in the world and indeed even a net power exporter- yet, this sector bears the weight of several stressed assets. With payable loans to the tune of USD 78 billion, about 66 GW of conventional energy is under various degrees of financial stress today.

A number of reasons including primarily the lack of coal supply, lack of long-term power purchase agreements, inability of promoters to infuse the equity and inordinate delays in regulatory orders and receivables from distribution companies added to the woes of the energy market in the country.

The silver lining though is the tide seems to be slowly changing for the better. The power developers are starting to look beyond the perils with the focus is shifting away from contracts with government-owned utilities to serving direct consumers. The Government’s proposal to amend the Electricity Act, 2003, which amongst others include a focus on renewable energy, introduction of smart grids, more empowerment of state governments to divide the distribution and supply business and reduction of cross subsidy charges will provide a great impetus to this sector. The Indian Government’s plan to shift towards electric mobility by 2030 also adds to that hope.

The underlying theme though, be it good or bad is the need for constantly evolving regulation. Good regulation is key to a stable energy policy; and good regulation alone properly balances the interests of government, consumers and industry.

It is against this challenging backdrop that we at ELP are delighted to bring you ELP’s guide –Indian Legal Issues for the Energy Sector. Drawing upon our experience of over 18 years within the power and infrastructure sectors, the paper has been especially curated to address the pressing legal issues which are being faced by various stakeholders within the sector. Our team of specialists at ELP has endeavoured to simplify and cut through the complex legal language to put forth these issues in a reader friendly format. We do hope this makes for some interesting reading. We enjoy every reader’s opinion and welcome your feedback.