Government plans structural reforms to streamline the power sector
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Focus on ensuring round-the-clock electricity supply: Minister
The Ministry of Power is drafting a scheme under which distribution companies (discoms) will be required to supply power in wholesale to firms licensed by power department to deliver power to consumers. The licensed firms will also be responsible for providing after-sale services to consumers.
This means that discoms will be relieved from the retail supply side of electricity which, under the putative scheme, will be handled by newly-created firms. In the process implementation of the scheme will generate thousands of new jobs and ensure better collection of bills and which, together with transmission losses, significantly contributes to aggregate losses. Around Rs 1 lakh crore worth of loans extended to the thermal power companies in India have gone bad, comprising 18 per cent of the total outstanding debt for the power sector, according to The Energy and Resources Institute (TERI).
The institute has said in a research paper that Aggregate Technical and Commercial (AT&C) losses in the electricity sector at 18.7 per cent remain very high as compared to other nations. “End-user prices are distorted by cross-subsidy with an aggregate gap between cost of supply and revenue realization still of about Rs 0.26 per kWh. This implies an annual revenue shortfall of around Rs 32,600 crore or 1.6 per cent of the total annual tax intake,” the paper said.
In order to bail out the stressed distribution companies the government had to shell out Rs 2.32 lakh crore under the Ujjwal Discom Assurance Yojana (Uday) scheme. Still dues of Rs 67,400 crore remained outstanding from the discoms to generator at the end of June 2019, according to the power ministry data.
Dues of around Rs 67,400 crore were outstanding from distribution companies to generators at the end of June 2019, according to power ministry data. This is despite the bailout of distribution company’s debt of Rs 2.32 lakh crore under the Ujjwal Discom Assurance Yojana (Uday) scheme. The Uday lays out trajectory for loss reduction, but at they have not dropped to the level the government had envisaged – the level was measly down about 21 percent to 18 percent, says Power Minister R K Singh.
Singh told reporters that creating a new tier of delivery agents in the chain of power supply is was part of a number of steps under way to reform the power sector to make it more efficient and environmentally friendly. “After extending power connection to all villages in the country, we are focusing on providing round-the-clock, uninterrupted supply to them,” he said. In order to achieve this objective, the Centre has planned to provide states with sufficient funds to build necessary infrastructure required for a 24×7 power supply.
Singh said farmers were being encouraged to generate solar power under the ‘Kisan Urja Suraksha evam Utthaan Mahabhiyan (KUSUM)’ and sell their surplus power to discoms. The move will help meet power shortage in rural areas to have all irrigation pumps in the country switched to solar power lines. At present, 1.75 million irrigation pumps have switched to solar and 1 million were connected to the grid.
