Cash-strapped Indian Power sector. For whom the bell tolls?

Last month, India experienced a power crisis, with almost all states imposing restrictions on the power supply. Following the Covid-19 pandemic, the country is moving little by little, and any further issues in this sector would be disastrous. While the automobile industry has yet to resume normal production as a result of the Russia-Ukraine war, the situation in other sectors is similar. Though supporters of Green energy have boosted its massive role in the coming years, the results are insufficient to replace the country’s coal usage. Yes, India is heavily reliant on coal, despite a massive shift in energy policy to maximize Green energy. Because of the variation in the availability of Green energy, whether solar or wind, in India, baseload stations can be either thermal or hydroelectric to some extent.

India’s Green energy producers have been chastised due to various regulations. The country has about forty more DISCOMs and nearly as many regulators. None of the regulators has issued common regulations on green energy. As a result, green energy developers must cater to the diverse interests of DISCOMs, which are neither uniform nor in the same category. Certain capacities may qualify as micro developers in one state and benefit from a few concessions. This does not have to be correct for other states. As a result, the pricing of machinery, prioritization, power tariffs, and so on vary, and developers may feel as if they are working in different countries, with different states forming different policies because this sector operates under a concurrent system involving both the central and state governments. Furthermore, it’s as if the blind lead the blind when it comes to regulation, and it took a long time for regulators to even announce draft regulations. There are also disagreements between the government and the regulators, which has slowed the pace of development in this sector.

The Indian power sector requires a common platform of all stakeholders with statutory authority to address all emerging issues at once. Technology is available in the country, but how it is implemented varies greatly from state to state. In India, there are both urban and rural customers. More than that, extended village type consumers spread throughout the state are another category that requires special attention because it does not fall under the Rural-Urban divide. Since independence, the sector has been under government control, and the inertia it has built up over the last 40-50 years is a major issue. Policies cannot ignite a different path to achieve the target in the Green sector, as many DISCOMs only move along the same path. This need be changed.

In terms of financial health, the Discoms are in poor shape. Any additional expenditure on them would be disastrous and likely to pique the interest of investors. While DISCOMs’ losses continue to rise, certain central PSUs’ profits are increasing at an exponential rate. For example, NTPC Ltd collects fixed charges from DISCOMs even during non-usage time, which can amount to millions of rupees. Discoms cannot pass this on to customers, especially in the post-covid scenario. Every cash profit of such PSUs is generated from the tears of public distribution utilities in India, where they are forced to announce tariff subsidies due to political pressure from state governments. Despite the fact that the rule states that such subsidies should be given to utility upfront. Except for private distribution companies, it never happens in India.

The Indian government has announced various bailout packages for these public utilities, such as repayment in instalments over forty years. The outcome has yet to be determined. Previously, financial concessions without demanding quality changes in this sector, such as controlling power theft, reducing losses, metering for all, and so on, did not save utilities from the financial crisis, and the number of utilities joining the loss-making group grows every year. For whom the bell tolls?

The sector requires an overhaul, and previous policy changes have only been cosmetic in nature. Certain institutions develop policies without much consultation with stakeholders, particularly end-users—the distribution companies—who are well aware of the field realities. The current instalment of the arrears scheme may have a similar fate if the guidelines are not well discussed at the field level and not at the corporate level. The trade unions in this sector, as well as the technocrats, all have valuable opinions for the betterment of the sector, and the Government should listen to them as well. A simple majority in parliament will not result in a bill with a human face becoming law if it is not discussed with various stakeholders. This must be taken seriously by both the central and state governments, as many still believe that privatization is a panacea for all ills in this sector. This is only one method available, and there are many better options available, especially when re-centralization is also a topic of discussion for resolving issues in the sector. (Tamperfinder)

#IndianPowerutilities #powertheft  #losses   #metering #privatization #RussiaUkraine #NTPC  #covid  #thermal #hydroelectric #regulation