In an interview earlier today, as broadcasted on CNBC Awaaz, power minister R K Singh mentioned that power shall be supplied to the whole country at the same rate and decision shall soon be made on market coupling.
Requesting members to share insights on this comment from the minister. There was news few weeks ago about discarding market coupling altogether. Is there a U-turn by the government? In plain and simple terms, essentially, what the honorable minister is saying, is that every GenCo shall be forced to produce power at a fixed rate and every distributor shall be forced to transmit power at the same rate to anywhere in the country. How is that ever going to be possible? I am not sure how a single price mechanism can ever be implemented in such a big and diverse country like India. The costs for producing and transmitting power in different parts of the country would be different, based on the raw material, logistics and other expenses. Also, any power producer, say one offering power at lowest cost, would still have limited capacity. This lowest cost producer of electricity can no where come close to meeting the demand of a certain region, forget the entire country. So, as long as demand exceeds the lowest cost supply, customers would be forced to revert to higher cost producers.
What am I missing!?
Or does this comment indicate willingness towards MBED? Meaning, MBED would ensure a common mechanism for best price discovery, which may be what the minister was indicating? If that’s what he meant, then isn’t this a positive for IEX? But if so, why the big fall today!?
Any insights from esteemed members of the group are highly appreciated.
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