In a power battle between the providers and consumers of electricity, the latter lose, yet again During the first decade of the 2000s, in a bid to boost power generation and to make it available at ‘affordable’ and ‘stable’ price to consumers, the then Government had mooted the idea of ultra mega power projects. Two such plants were bagged by Tata Power Ltd (TPL) and Adani Power Ltd (APL) under tariff-based competitive bidding (TBCB), each with an installed capacity of 4,000 MW and 4,620 MW, respectively. While the TPL is based entirely on imported coal, APL uses 70 per cent domestic and 30 per cent imported coal. Under long-term power purchase agreements (PPAs), they committed to sell to power distribution companies at...
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Category: Demand vs Supply
Electrifying 40 million households – challenges ahead
In his address from the ramparts of the historic Red Fort on August 15, 2015, prime minister, N Modi had declared that his government will provide electricity to all the 18,000 villages [all located in inaccessible and the most difficult part of India] – that remained unconnected even 68 years after independence. Modi promised to complete this job within 1000 days. True to his commitment, the government accomplished the mission with the last of these villages in Leisang [Manipur] having got the electricity on April 28, 2018 nearly two weeks ahead of the target. A village is considered electrified if it has the basic electrical infrastructure and 10 percent of its households and public places including schools, local administrative offices...
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Power reforms – piecemeal measures won’t work
The union power minister, RK Singh has convened a meeting of state power ministers to discuss comprehensive reforms in the power sector to discuss among others measures (i) to uphold sanctity of power purchase agreements [PPAs] between generators and state electricity boards [SEBs]/power distribution companies [PDCs]; (ii) curbing wasteful electricity consumption; (iii) remove cross-subsidy surcharge and (iv) direct benefit transfer [DBT] of power subsidy. Before discussing the reforms at the outset, it is important to take cognizance of the problems facing the sector and the source of their origination. First, SEBs/PDCs, the life-line of power sector are incurring huge losses – a phenomenon seen for over two decades. Unable to make timely payments to power generators – public sector undertakings...
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Crack the whip on power thieves
A big headache for Modi – government is galloping losses of state electricity boards/power distribution companies [SEBs/PDCs]. This had a debilitating impact on their ability to supply electricity to consumers and industrial/business establishments despite plentiful availability [courtesy, huge step up in production and timely supply of coal to generating stations besides big boost to renewable energy]. The logic is simple. Since, SEBs/PDCs are perennially incurring loss [as on September, 2015, their accumulated loss stood at Rs`380,000 crores and outstanding debt at Rs`430,000 crore], they are unable to make timely and full payment for their purchase from independent power producers [IPPs]. So, the latter suspend supply which former cannot make up by increasing generation from their own plants either as due...
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Energy sector reforms – face political hurdle
The government’s premier think-tank Niti [National Institute for Transforming India] Aayog has firmed up the National Energy Policy [NEP] and the first draft will soon be made public. An overarching objective of NEP is to bring about comprehensive energy sector reforms that could free up sectors such as coal, electricity and fertilizers of subsidies and price controls and help produce more power and make generation projects commercially viable for private companies. It lays out a clear roadmap for lowering subsidies on fertilizers and power by aligning their prices to the market. The policy also seeks to improve the financial condition of power distribution companies [PDCs], which are presently bogged down by huge debt to make the sector profitable – in...
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DOLES TO ELECTRICITY BOARDS DAMAGING
States must bring an end to ‘competitive populism’ and discipline loss-making power boards. They should check their monopoly over power distribution The Union Government has set up a committee to look into restructuring tariff to reduce the burden on industrial units, by making domestic and commercial consumers of electricity pay more (most States categorise those consuming more than 800 units a month as large domestic consumers). The committee will work on classifying consumers in two to three categories and sub-categories to bring transparency in power billing. What is the trigger? At the outset, it is important to know as to (i) why industrial consumers are currently paying more, and (ii) what is the justification for seeking reduction in tariff applicable...
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Stymied by populism
ELECTRICITY REFORMS : One major reform that has been sacrificed at the altar of populism is the provision for ‘open access’ under the amended Electricity Act (2003). Under the Narendra Modi dispensation, even as reforms are progressing on several fronts, ironically, electricity is one area where implementation is hamstrung by political establishments in majority of the states, including the BJP-ruled ones. The reason being they are embracing populism in the form of supply to certain segments such as farmers, poor households at low tariff, or even free, and letting thefts happen. One major reform that has been sacrificed at the altar of populism is the provision for ‘open access’ under the amended Electricity Act (2003). Under this policy, which was...
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Modi must rein in power theft and freebies
On September 12, 2015, chief secretaries of states whose power distribution companies [PDCs] are making losses had a meeting with union power minister, Piyush Goyal. This was followed by a meeting of PDCs officials with prime minister on September 14. They were demanding support from central government in dealing with their accumulated losses of over Rs 300,000 crores. To be precise, they wanted these liabilities to be extinguished so that they start on a clean slate. Contrary to expectations, Team Modi has categorically rejected any bail out. This is a bold stance. Since 2002, PDCs got two bail out packages [Rs 40,000 crores in 2002 and around Rs 200,000 crores in 2013]. These were granted on the promise that they...
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Stemming rot in power sector – Kejriwal shows way
During his first shot as Chief Minister, Delhi, Arvind Kejriwal had promised 50% cut in power tariff. He did so primarily on his conviction that the power distribution companies [PDCs] had indulged in financial irregularities leading to inflated cost of procurement and distribution. These were approved by DERC [Delhi Electricity Regulatory Commission] acting under diktat of then political dispensation [a clear indication of how regulator was forced to play to his masters tune can be gauged from the fact that the then chairman who had approved 23% reduction in tariff in 2010 was removed and his successor affected hike of 22% in 2011 and a further 32% in 2012]. Kejriwal’s plan was to nail these irregularities and recover excess sums...
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Gas-based power plants ‘woes’ – look for permanent solutions
True to its commitment to filling the cleavages in system left over by a decade of policy paralysis and mis-governance under erstwhile UPA dispensation, Modi – government has sewed up a package for resurrecting 24,000 megawatt (mw) of power generation capacity based on gas. For starters, 14,000 mw of capacity with an investment of Rs 60,000 crores is lying dormant (no generation at all) due to absence of fuel linkage. Another 10,000 mw with Rs 40,000 crores blocked is operating at sub-optimal level i.e. below 30% due grossly inadequate supply of domestic gas. The relevant plants were commissioned in anticipation of abundant supplies from prolific KG-D6 field off Andhra coast [this discovery was made in 2002 and initial development plan...
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