Universal and round-the-clock access to affordable electricity is a prerequisite for India’s sustained economic growth. India is currently the world’s third-largest producer of electricity with an installed capacity of 371 GW. Going ahead, rapid growth and urbanisation will drive up the demand for electricity manifold, necessitating a healthy, efficient and consumer-centric power sector. It is in this light that an overhaul of The Electricity Act 2003 has been proposed. Many provisions of the 2003 Act are now archaic, given the sector’s rapid evolution, and this has resulted in several inefficiencies and challenges creeping in, hampering further growth.
Foremost among these is a cash-strapped distribution sector, the weakest link in the value chain. Most distribution companies (discoms) today are beset with operational inefficiencies and acute financial crunch, with high Aggregate Technical and Commercial (AT&C) losses (averaging around 22%). Unsustainably designed tariff structures coupled with collection inefficiencies have played havoc with discoms’ cash flows, leading to their delaying payments to generators and also curtailing power purchase, both dampening investments in the sector.
