In 2012, the erstwhile UPA – government had granted a financial restructuring package [FRP] to deal with a mammoth Rs 200,000 crores debt of ailing state electricity boards [SEBs]. Under it, 50% of the outstanding liabilities were taken over by respective state governments and for balance 50% bonds were issued to public sector banks [PSBs] carrying an interest as low as 9%. The FRP was conditional on states taking requisite steps to increase tariff in a calibrated manner and reduce transmission and distribution [T&D] losses in order to improve realization from sale of electricity so that it converges to its cost of procurement. The overarching objective was to eliminate losses in 2-3 years and thus ensure that they are no...
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Category: Restructuring of SEBs
Cut theft and freebies to stem power losses
The Centre must deduct the discoms’ losses from the devolution of taxes to the erring states On September 12, 2015, the chief secretaries of states whose state electricity boards (SEBs)—that carry out power distribution—met Union power minister Piyush Goyal with a demand for a fresh bailout package to deal with the SEBs’ accumulated debt of over R3 lakh crore. Goyal took a bold stand by turning down the request. SEBs have already got two bailout packages—R40,000 crore in 2002 and around R2 lakh in 2012. These were given on the promise that SEBs will adjust tariff to plug gaps between revenue and the cost of electricity, besides reducing transmission and distribution (T&D) losses. But, they have failed on both fronts and...
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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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State electricity boards – ‘Achilles heel’ of India’s power landscape
A major ingredient of Modi – government’s development agenda is un-interrupted supply of power 24×7 to industries, services, agriculture, households et al in required quantity at affordable price. It plans to reach this goal in less than a decade. Undoubtedly, it is making unstinted efforts in all vital areas viz., adding to the generation capacity [a big chunk in solar power to make our systems environmentally benign]; making arrangements for fuel supply especially coal and gas to run power plants at optimum load; augmenting and strengthening the transmission and distribution (T&D) infrastructure [by involving private sector through a competitive bidding process] and providing last mile connectivity through a well-spread out network of feeder lines etc. However, one area of concern...
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Stop cult of power freebies
Inaugurating the first Renewable Energy Global Investors Meet (RE-Invest), prime minister Modi castigated political parties for promising to supply power at reduced rates saying how could they make such promises when the concerned states are dependent on electricity supply from outside. The remark was targeted at Aam Aadmi Party (AAP) which in its election manifesto, had promised to cut electricity bills by half even as Delhi meets nearly 70% of its power requirements from other states. In 2015-16, its total requirement is expected to be over 6000 MW; so it will draw 4200 MW from other states. However, it would be imprudent to dismiss this as a political statement directed at AAP alone. Cutting across party lines, Modi was making...
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India’s power sector on the ‘brink’
Power supply to industries, businesses, agriculture, households etc is akin to blood circulation in the body. Just as stoppage of blood supply to any body-part renders it dysfunctional, disruption in power supply has same effect on economic activity. Minister for power and non-conventional energy, Piyush Goyal had precisely this at the back of his mind when he promised that Modi government will ensure un-interrupted power supply 24 hrs a day through out the year to every household and industry. To achieve this goal in an environment friendly manner, government has declared its intent to set up in next 5 years 100,000 mw each of power generation capacity based on ‘solar’ and ‘wind’. This coincides with Modi’s visit to USA where...
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Can’t do gas pricing in a vacuum
Barely a few months after the news of allowing RIL to increase the price by 3.5 times the current level on the supplies from its KG fields, the spectre of a steep hike has come to haunt users again. A committee under C Rangarajan, mandated to suggest the design of future contracts for exploration and production of oil and gas, has also recommended a basis/formula to price domestically produced gas. It has suggested price to be benchmarked to four series of international prices, viz Henry Hub (HH) in the US, National Balancing Point (NBC) in the UK, netback prices of sources of LNG supply for Japan, and netback price of Indian imports of LNG at well head of exporting countries....
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