For India now progressively moving towards an energy use configuration that is environment friendly [increase in share of non-fossil fuel such as nuclear, solar, wind, hydro etc], a steep decline in the cost of power generation based on solar and wind to level even below Rs 3 per unit – enabled primarily by reduction in the cost of equipment and services – has come as a boon. The state electricity boards [SEBs]/power distribution companies [PDCs] are keen to be a part of this transition and would like to procure power at a lower rate so that this benefit can be passed on to consumers. Besides, this will also help them in reducing losses and make their operations financially sustainable so...
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Category: T&D losses
Don’t switch-on DBT for power without reforms
Recently, during an interaction with a leading economic daily, Union power secretary Ajay Kumar Bhalla gave an indication of the government’s intent to launch direct benefit transfer (DBT) to disburse power subsidy. Alluding to a clutch of pilot projects for DBT-Power to be launched soon, he exuded confidence that this will help curb wasteful electricity consumption, limit subsidies to the really needy, stem losses of state electricity boards (SEBs) and power distribution companies (PDCs) and reduce tariff for industries. The move is prompted by the claimed success of DBT for giving LPG subsidy and similar initiatives in fertilisers and food grains. Has the idea yielded the desired outcome in LPG? What is the current status in other areas? Is it...
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DBT-Power – It’s a non-starter
Recently, during an interactive with a leading economic daily, union power secretary, Ajay Kumar Bhalla gave an indication of the government’s intent to launch direct benefit transfer [DBT] for giving power subsidy. Alluding to a clutch of pilot projects for DBT-Power to be launched soon, he exuded confidence that this will help in curbing wasteful electricity consumption, limiting power subsidies to really needy and denting losses of state electricity boards [SEBs]/power distribution companies [PDCs]. It will also help bring down current hefty tariffs charged from industrial customers. The move is prompted by DBT success for giving LPG subsidy and similar initiatives for fertilizers and foodgrains. Has the idea yielded desired outcomes in LPG? Has it really been kicked off in other...
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SEBs woes – generators can’t escape blame either
Recently, Yogi – government in Uttar Pradesh [UP] cancelled a number of power purchase agreements [PPAs] that were signed in the past by state electricity boards [SEBs]/power distribution companies [PDCs] with independent power producers [IPPs] under MOUs [memorandum of understanding] route. The reason given was that cost of purchasing power under these agreements was substantially higher [in some cases even double] than the average cost of purchase @ Rs 4 per unit. In view of surplus availability of power in the state, the government hopes to lower overall cost even while meeting all its requirements. In turn, this will help reduce losses of SEBs/PDCs in the state. The galloping loss of SEBs/PDCs [as on September, 2015, their accumulated loss stood...
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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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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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Electricity tariff – robbing Peter to pay Paul
The central government has set up a committee consisting of the officials of states and power ministry to look into restructuring tariff to reduce burden on industrial units by making large domestic and commercial consumers of electricity pay more [most states categorize households consuming more than 800 units of power 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. It will also study the possibility of increasing fixed charges on connected load of domestic consumers to encourage them to surrender un-utilized load. What has triggered thinking along these lines? At the outset, it is important to know as to why industrial consumers are...
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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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