PM to tell states: go for ‘crash’ plan to cut power theft by half

The timing couldn’t have been more appropriate. The PM has, on several occasions, strongly expressed his disappointment over the “persisting problems in the power sector” that need to be overcome if India needed to achieve 9% per cent growth.

In fact, at the last Committee on Infrastructure meeting in October, the PM while terming the 40% T&D loss as the “bane of the power sector,” said: “No civilized society nor a functioning commercial entity can sustain losses on such a scale”.

To check this, besides highlighting the importance of theft control and proper metering, the February 14 meet is going to call for “feeder bifurcation” and adoption of “franchisee” models to implement the “crash programme”.

“Feeder bifurcation” is meant to promote accountability by identifying which power goes where. Under “franchisee models,” the job of cutting down losses in theft-prone areas is outsourced to companies or agencies.

As cutting T&D losses is a state subject, the Centre is going to redesign the accelerated power development and reform programme (APDRP) and use a carrot-and-stick approach to ensure state governments get cracking.

The Centre is already unhappy with the reform models adopted by states which entail an annual subsidy payout for a pre-decided annual loss reduction target. The subsidy fills in the gap between the revenues that can be raised through tariffs and the additional revenues that can be gained from reducing T&D losses.

However, a back-of-the-envelope calculation shows that this subsidy payout can be over Rs 100,000 crore to get the T&D losses to a reasonable level.

On other issues:

• As part of improved targeting of subsidies to families below the poverty line and farmers, the Centre is going to tell states to implement a “lifeline consumption” for both agriculture and domestic users, rather than providing access to runaway consumption that is only open to misuse. The use of smart cards is also going to be suggested where a consumer is entitled to a fixed amount of consumption.

• As open access is part of the electricity law (a provision that allows consumers to choose their source of power and needs to be implemented in two years), the Centre is going to tell the states to levy a “realistic surcharge” on consumers who want to break away from state-utility supplies and choose their power (that could even be in other states).

Failing this, open access cannot be implemented. In fact, in some states open access surcharge has been levied in a manner that makes it uneconomical for consumers to source power from alternative sources. The Centre, last year, even cleared a complex formula for working out this surcharge but was not adopted by the state regulators.

• On rural electrification, the PM to set 2009 target for full electrification

• On capacity addition, where all avenues for investments are going to be tapped, the PM at the meet, is going to urge states to tap unutilized and idle captive generation and bring the same to other consumers. However, CMs are going to forcefully tell the PM that the Centre needs to ensure proper availability of fuel. In fact some coal rich states are expected to urge for some compensation (free power for instance) for sourcing coal from their state.