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  1. “Overview of Legal Issues in Regulatory Reforms in Bhutan”A Presentation by participantsfromBHUTAN1.Karma Tshewang 2. Kuenzang Chhoden 3. Nima Tshering 4. Jambay Yeshi Workshop on Overview of Legal Issues in Regulatory Reforms November 11-15, 2002 - Hyderabad

  2. Coverage • Country Profile • An overview of Energy Sector in Bhutan • History of Energy Regulation in Bhutan • The Power Sector Reforms • The current status of Energy Regulation • The Legal Basis • The future of Energy Regulation in Bhutan

  3. DisclaimerThe materials & views expressed in this presentation are mostly of our own and may not necessarily be consistent with that of the Royal Government of Bhutan.

  4. I. Country profile – Bhutan • Location : Southern Asia, between China & India • Total area : 47,000 Sq. km • Population : 700,000 • Pop. growth rate : 3.1% • Language : English & Dzongkha (official). • Literacy rate : 53% • Religion : Buddhist 90%, Hindu 10% • National capital : Thimphu • PPP : $760 per capita • Industries : Hydropower, cement, food products, wood. • Natural resources : Hydropower, gypsum, calcium carbide, timber. • Agriculture : Rice, potatoes, cash crops, timber. • Currency : Ngultrum ($1 = Nu. 45)

  5. II. Energy Sector – An Overview • Almost entirely Hydro based power • Total hydro power potential of 30,000 MW • Techno-Economically Feasible:16,000 MW • Total installed capacity is about 445 MW • Hydro based is 428 MW (1.42% of total potential) • Mega hydro projects are export oriented • Power sector contributes about 45 % to the GDP • Capacity of about 1500 MW by year 2005 • Hydropower Sector is considered as the engine of Economic growth of the country • Energy demand in the order of 500 MU

  6. III. History of Energy Regulation • Electricity Terms & Conditions was approved by the Council of Ministers in 1977 • Inspection & Arbitration Cell was created in 1983 for dispute resolution between the Govt. & the customers & upgraded to a full Unit in 1996 • Power Regulatory Division was created under DOP in May 2000 to look after all the inspection & arbitration, safety issues, etc.

  7. History of Energy Regulation…..

  8. IV. The Power Sector reforms DEPARTMENT OF POWER [DOP] DEPARTMENT OF ENERGY [DOE] BHUTAN ELECTRICITY AUTHORITY [BEA] BHUTAN POWER CORPORATION [BPC]

  9. The Reforms…..DoE from July 2002 DEPARTMENT OF ENERGY Renewable Energy Division Hydromet Services Division Chief Executive Officer Bhutan Electricity Authority Planning & Coordination Division Regulatory & Standards Division Tariff & Pricing Division Licensing & Monitoring Division

  10. V. Current Status of Energy Regulation • Electricity Act was passed in 2001 with the aim of : • Restructuring the electricity supply industry • The establishment of BEA • Technical regulation of the electricity supply industry • The private sector participation in the electricity supply industry • To empower the Government to participate in the formation of any company for the purpose of carrying out all or any of the purpose of the Act

  11. The current status ..Functions of the Authority – BEA.. • To develop regulations, standards, codes, principles and procedures; • to process applications and issue, modify and revoke licenses; • To monitor the performance of Licensees and their compliance with the provisions of the Electricity Act; • To determine, or approve tariffs proposed by the Licensees, and review existing tariffs; • To prescribe and collect fees, charges or royalties from Licensees; • To impose any fines, sanctions or penalties for any breach of provisions of this Act; • To establish dispute resolution process, settle disputes between the Licensees and between Licensees & Customers;

  12. VI. Legal Structure Ministry Department of Power DoERegulator BPCtransmission, distribution, planning and system control BPTCtrader, load planning

  13. Legal basis….. • Legal basis: • As of now, the decisions made by PRD/Authority is final and can be appealed to the courts in case the deliberations/justice meted out is not proper • The Act gives the customer a right to appeal to the Authority in three different situations: • The Customer’s Right - the right to appeal, • The customer’s right to compensation, • The right to appeal when Electricity is disconnected.

  14. Legal Basis… Appealing to the Courts: • Any dispute, controversy or claim arising out of or relating to provisions given in this Regulation or the breach, termination or validity thereof that cannot be solved through negotiations in good faith, shall be settled by the Court of Law. • It is expensive to bring appeals to the Courts. As a consequence only resourceful persons (any individuals, firm, company, association, partnership or body of persons) will be able to appeal. This is discriminatory.

  15. Legal Basis… • It takes a lot of resources, time & money, for all the involved parties to bring appeals to the Courts. It is not very efficient. • Disputes related to the electricity supply industry are often very technical and not suited for handling in the Courts. The time and energy of the judges should be reserved for the important & principal cases. • Handling of appeals by the Authority and the Ministry will raise competence and awareness in relation to the Act and belonging regulations. • Arbitration takes a lot of resources when it comes to disputes under the Act, Therefore, it seems reasonable that the Authority/DOE/the Ministry handle the disputes.

  16. Legal Basis… “Procedures to settle disputes” • The complainant shall approach the System Operator(S.O.) in order to solve the dispute. • Upon receiving such complaint, the S.O. shall promptly make suitable investigations and accordingly inform the complainant while keeping the record of complainant. • Incase of the complainant not being satisfied with the response from the defendant, he may refer it to BEA within 30 days. • Decisions of the BEA may be appealed to the DOE/Ministry within 30 days after receiving the written decision. • The parties in a dispute shall be given to present their views within a specified time, not being less than 30 days subject to payment of a fee prescribed by BEA.

  17. Authority & Constitution of BEA • Chairman – Minister & a CEO • Not less than three members • Chief Executive Officer as Member Secretary • Appointed by the Minister for a Five year term with a limit of two consecutive terms • Is a corporate body with perpetual succession • Shall have an official seal • May sue & be sued in its own name • May acquire, hold and dispose of real and personal property, and • May do and suffer all acts and things that a body corporate may do and suffer by law.

  18. V. The Future of ER… • Creation of a separate Ministry for Energy and Water Resources (expected by 2004) • With the outside assistance, a separate & full fledged BEA formation is in the process. • Provision for establishment of BPTC under the Companies Act 1989 To have well framed legal, commercial, and regulatory framework

  19. End of Presentation “Thank you for your kind attention” Any Questions!