The twin problems of AT&C losses and under-recoveries on sale to certain households or farmers in some States have existed for close to a quarter century The Centre is planning to launch ‘another’ scheme to enable public sector power distribution utilities (discoms) to cut technical losses via “transition financing” of the required capital expenditure. The discoms stand at the core of the power supply and distribution network in the country. Mostly owned and controlled by State Governments, they buy electricity from the generating companies (call them gencos) in the public sector such as National Thermal Power Corporation (NTPC) etc and gencos in the private sector commonly referred to as independent power producers (IPPs) and supply to the consumers. Technical losses...
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Category: Restructuring of SEBs
Discoms show signs of ‘turn around’
According to PRAAPTI (Payment Ratification and Analysis in Power Procurement for Transparency in Invoicing of generators) – a portal maintained by the Ministry of Power (MoP) – , the legacy dues of power generating companies (gencos) from distribution companies or discoms in short came down from Rs 1,20,540 crore in June 2022 to Rs 61,025 crore in July 2023. If, we include dues of transmission companies (transcos) and traders also, then total dues of all those involved in electricity supply chain decreased from Rs 1,39,747 crore to Rs 69,957 crore during the same period. The MoP has attributed this drastic improvement in clearance of dues by discoms to implementation of late payment surcharge (LPS) and related matters Rules, 2022 as...
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Electricity reforms shelved
State govts must adopt DBT to give power subsidies, instead of burdening discoms with them During a review meeting with the bureaucrats of states and UTs and CEOs of power sector CPSUs on December 18, Union Power Minister R K Singh expressed satisfaction over the country becoming power-surplus and increasing the power availability to 22 hours in rural areas and 23.5 hours in urban areas. He opined that “the next step is to take it to 24X7 guaranteed power supply at an affordable price and ensure the viability of power distribution companies (discoms).” The two issues require close examination. A sizeable chunk of electricity is supplied to households and farmers at a fraction of the cost of purchase and distribution, or...
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No power in these reforms
Just as the UDAY scheme was meant to extinguish the liabilities of discoms, the proposed electricity distribution reform programme, too, seeks to give them the money on a platter The Government is expected to announce a Rs 3,00,000 crore electricity distribution reform programme to reduce losses and improve the efficiency of power distribution companies or discoms. Christened ‘Reforms-Linked, Result-Based Scheme for Distribution’, the move is aimed at helping discoms trim their electricity losses to 12-15 per cent from the present level and gradually narrow the deficit between the cost of electricity and the price at which it is supplied, to ‘zero’ by March 2025. This is quite similar to the Ujwal Discom Assurance Yojana (UDAY) launched in 2015, wherein the...
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Power reforms – chasing a mirage
The special economic and comprehensive package ‘Atmanirbhar Bharat Abhiyan’, unveiled by the finance minister, Nirmala Sitharaman in 5 tranches during May 13 – 17, 2020, has two components that have a crucial bearing on the fledgling power distribution companies – commonly known as discoms. The discoms – mostly owned and controlled by state governments – procure power from independent power producers [IPPs] and public sector undertakings [PSUs] viz. National Thermal Power Corporation [NTPC] besides their own generating stations and sell to consumers. The first component under the first tranche provides for a special loan of Rs 90,000 crore from Rural Electrification Corporation [REC], Power Finance Corporation [PFC] to discoms to enable the latter clear their dues to IPPs and PSUs....
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Corona pushes discoms to the brink
Given the nature of the crisis, all concerned states should promptly release funds from their budgets to enable discoms to clear all outstanding dues This has meant the destruction of nearly 40% of the total electricity demand. ————————————————————- Even as corona has triggered widespread devastation, a major casualty is the power sector. Following the nation-wide lockdown announced by prime minister Narendra Modi on March 24—this was an absolute must given the hyper-contagious nature of the virus and an overarching need to preempt community transmission—most industries and businesses, including the Railways (passenger segment), have downed their shutters. This has meant the destruction of nearly 40% of the total electricity demand. All consumers, be it industries, shops and establishments, households, farmers, etc, fulfil their...
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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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Electricity reforms – ‘open access’ stymied by populism
An over-arching component of prime minister Modi’s good governance mantra is effective implementation of the laws and policies & programs of the government. He has amply demonstrated this in several areas viz., DBT [direct benefit transfer] of LPG subsidy, Jan Dhan Yojna [JDY], MGNREGA etc with substantially positive outcomes. However, electricity reforms is one area where proper execution is hamstrung primarily due to non-cooperation from states. At the core of reforms initiated by present dispensation in the power sector is improvement in the functioning of state electricity boards [SEBs], greater regulatory oversight over SEBs and power generators besides creating conditions for enhanced competition in the sector so that consumers get the benefit in terms of lower tariff and better quality...
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UDAY – no panacea for SEBs woes
One of the major accomplishments of Modi – government during its two years stint has been in alleviating the constraints facing power generation companies/entities. It has done so by increasing production of coal by Coal India Limited [CIL] and filling all voids in the evacuation, transportation and distribution infrastructure to reach supplies to generating stations. It has also helped gas based power plants by arranging supplies of gas at lower rates enabled by pooling of imported LNG [liquefied natural gas] with cheaper domestic gas. The cost of LNG itself has been brought down drastically by re-working an existing long-term 25 year contract with RasGas [Qatar] to align the formula with its low current international price [courtesy, low crude price]. It...
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Power consumers – relief stalled by court
In the race to provide power at affordable rates, Modi – government has taken several initiatives. These include increase in supply of cheaper domestic coal, rationalization in coal linkages [giving more to energy efficient generation plants], strengthening of transmission and distribution [T&D] systems, financial restructuring to reduce interest burden, enabling gas based power plants to access gas at cheaper rates [via pooling of imported LNG with domestic gas], incentive to states for reducing theft etc. However, there is one area where there is unprecedented scope for reducing cost of power supply and yet, it has not got the desired attention and even where the ruling establishment takes considerable interest and wants to act with alacrity, the efforts are frustrated by...
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