Reforms is only the first step
The new government has taken its first major step to extricate the power T&D sector from the financial morass that it has perennially been in. A few weeks ago, the Union Cabinet cleared a major programme worth $7 billion to spruce up the beleaguered T&D sphere. It is appalling to note that even today, the aggregate technical & commercial losses—ATC losses as they are called, supplanting the erstwhile term transmission & distribution losses or T&D losses—are embarrassingly high at 40 per cent in some states. Needless to say, much of these losses are commercial in nature and direct consequences of power theft or non-remunerative electricity consumption.
For decades on end, successive governments have promised “free power” as a populist measure. Free power or power at very cheap rates has acquired the nature of a “right” in the minds of rural India. Very rich farmers are paying less than a rupee per kwh consumed, which is cross-subsidized by industrial consumers—whatever be their financial condition—at the rate of over Rs.10 per unit. Rationalizing of this cross subsidy, however mammoth the task could be, has to a paramount priority.
Blatant power theft is commonplace thanks to the chaotic state of the power distribution infrastructure. The mega programme announced by the government has a generous component for metering of transformers and consumers in urban areas. Even as India has set its sights on Smart Grid, it is paradoxical to know that even metropolitan cities still have antiquated meters and manual bill generation procedures. At this juncture, the new government should redouble its efforts in garnering private sector participation in the power distribution sector. With the distribution franchisee model tasting little success, new policies should lean towards other models like joint ventures between the private and public sector.
Commercial losses need to be put in check. This cannot be achieved merely through announcements of reforms or earmarking of investments. Creating a new culture where electricity is a privilege that needs to be paid for fairly, rather than a right taken for granted, is the gigantic revolution on hand.
As the commercial aspect of the power sector improves, utilities will be in a much better position to invest in improving the power distribution infrastructure. Only this will break the vicious cycle of financially impoverished utilities and technically impoverished infrastructure, with hapless consumers relegated to mute witnesses.