Despite decades of rhetoric on turning around crippled state power distribution companies (discoms), their aggregate technical and commercial (AT&C) losses — a measure of overall efficiency — continue to rise standing at 20.57 per cent at the end of November 2018, up from 18.6 per cent at the end of FY18.
Even worse, sixteen states are saddled with AT&C losses of over 30 per cent, a far cry from the 15 per cent target set for FY19. Only eight states and two Union Territories have met this mark so far.
India has generally struggled with a lack of consistency in electricity supply and ambitious plans laid out for the sector were set to go into limbo if discoms were not spruced up. In November 2015, therefore, the Ujwal Discom Assurance Yojana (UDAY) scheme was introduced to improve operational and bill collection efficiency besides reducing interest burden, cost of power and power losses.
UDAY helped reduce discom losses from a staggering Rs 52,000 crore in FY16 to Rs 35,683 crore in FY17, but this momentum hasn’t been sustained. Three years on, outstanding dues owed by discoms have risen to Rs 40,493 crore at the end of November 2018, up 27.4 per cent year-on-year as per government data.
In a recent review meeting, discom officials from various states pointed out that India may be heading for power shortages during summer as low consumer tariffs, late subsidy disbursal from state governments, an increase in power tariffs and a shortage of coal continue to plague discoms. State utilities have consequently been unable to ensure timely payments to generation firms.
“We would be grateful if these states can be asked to clear pending payables, as further piling up of dues may result in inability of generators to pay for coal, and in this in turn may adversely affect the power supply position,” Ashok Khurana, Director General, Association of Power Producers had written to the Centre. The government has constituted a group of ministers (GoM) to review the issue but the panel is yet to give any specific recommendations.
The major defaulter states include Jammu & Kashmir (J&K), Manipur, Bihar, Goa, Jharkhand and Uttar Pradesh beside ten others. Only six state discoms — Rajasthan, Tripura, Gujarat, Daman & Diu, Maharashtra and Uttarakhand —earned profits as of September 30, 2018.
Meanwhile, the new power tariff policy has proposed that discoms with losses above 15 per cent won’t be compensated for through tariffs after FY19. With less than a month-and-a-half month to go, the pace at which discoms have reduced losses makes it unlikely that many meet this target.