24×7 quality power at affordable tariff is the key for economic development especially for a developing country like India. For this, efficiency must be ensured in the entire eco system of power supply – right from generation to distribution. Ever since the Modi government has taken over, the centre has taken several measures for improving efficiencies. And these steps have started showing some incremental benefits.
But, can these steps bring enough sustainable affordability in long term especially in view of the 6-monthly escalation prescribed by CERC? There is a fear that the escalation rate will be several times higher than the incremental benefits that the tiny steps can bring in. An end-user is not concerned about these issues. So are the discoms, as long as they can get assured supplies at competitive rates.
In the field, we see real picture. Different power plants have different scenarios because of which the cost of electricity production varies substantially. Some states get power at higher tariff, and some at lower, some are host states, so they can get free power from the plants. Some have plants near the source of fuel, and some plants are located far away and the cost of transporting fuel is very high. So, the gencos will sell electricity to discoms at different rates.
We also see AT&C losses stagnating at about 20 per cent. Even in Delhi, where the distribution is in private hands, it is hovering around 20 per cent. The same is the status with state like Gujarat. AT&C losses are at about 10-11 per cent in certain southern states like Tamil Nadu, Karnataka, Kerala, but the same is mainly due to shortage of power in those states, and the loss is likely to go up as the power situation improves.
With these statistics in hand, we can safely conclude that surplus power leads to inefficient distribution. Uday’s focus on bridging gap between procurement cost and selling price of power will be counter-productive unless we are also able to restrict the AT&C losses in Delhi to a single digit. If this cannot be achieved, it means we are not on right track.
In our analysis, country should resort to “Tariff Pooling”, which in other word may also mean the agency carrying out transmission of power is also made responsible to procure it centrally or regionally? Under this scheme, pooled resources can ensure efficient allocations on real time basis across the nation. There may not be surplus kind of situation and hence wastage can be minimized. We have given details in our cover story.
On the other hand, the Yogi government in Uttar Pradesh has a tough job in hand. Its over 52 per cent rural households are without electricity connection even though the center has provided power facility in all of its villages barring only 65 villages. The state also has to deal with favours extended to the Bajaj group by the previous regime through UPPCL in power procurement at substantially high rates bleeding dicsoms profusely. This and much more is covered in our lead story.
