The N K Singh task force on power sector reforms has proposed wide-ranging fiscal measures, including cut in customs duty, abolition of special ad valorem duty and tax holiday to step up investments in a bid to bring down tariffs.

Recommending a slew of measures to improve generation, transmission and distribution, the eight member panel sought tax holiday for new investments till 2012, exemption from dividend distribution tax payable by companies in the sector, cut in import duties for coal and naphtha.

Apart from fiscal sops, the task force recommended measures that would enhance availability of funds for the sector.

Towards this end it suggested facilitating borrowings through ECB route with adequate hedging, granting priority sector status to investment in rural generation, transmission and distribution, granting SLR status to power sector bonds, providing long term funds coupled with financing by institutions like PFC and REC.

Apart from Singh, Planning Commission Member, the other members are S Narayan, Economic Advisor to Prime Minister, Revenue Secretary Vineeta Rai, CEA Chairman H L Bajaj, RBI Deputy Governor Rakesh Mohan, UPERC Chairman J L Bajaj, ICICI Chairman K V Kamath, LIC Chairman S B Mathur, legal luminary Fali Nariman.

The Singh panel also said more pit head power stations would be required for efficient use of natural resources with the need for harnessing hydro potential to greater extent.

A robust national grid would be required for this purpose, the panel felt.

Transmission tariffs should be fixed taking into account distance and direction factors and related to power flows.

This would address pan-caking of networks to a great extent and promote open access, it said.

To promote robust transmission system for open access, the committee felt prior arrangements should not be a precondition for expansion of central and state utilities.

All inter state transactions are to be charged on basis of average losses on national transmission system.

A two-part tariff was been recommended for transmission featuring capacity based access charges and energy-based usage charges for utilising the grid.

CERC and state commissions have been asked to evolve a common framework flows across all assets to be priced as per a common transmission tariff.

Multi-year tariffs with focus on transmission loss and congestion are recommended for the sector to be implemented from April next year.