 "Power regulators' body plans study on discoms' performance")
Forum of Regulators (FOR), a representative body of central and state electricity regulatory commissions, has proposed to carry out a comprehensive study on performance of distribution utilities by roping in consultant(s).
The study has been necessitated as operational and financial performance of distribution companies (discoms) has been a major concern. Further, poor billing & collection, high level of distribution losses, increasing cash losses and poor financial management are reported to be plaguing discoms’ performance.
FOR has invited bids up to September 1. It expects the consultant to cover all distribution utilities. Performance of the distribution utilities will be from FY 2009-10 to FY 2013-14. According to FOR, restoration of health of the distribution sector remains critical to success of power sector reforms.
“It is a good initiative by FOR to find out the problems in different states and work out packages of reform initiatives needed. State-specific action plans are needed. Distribution reform has gone on the back burner in the last four years. There are eight states in the country which account for 95 per cent of the total annual loss, which has reached a staggering figure of Rs 80,000 crore. It is most important that distribution reform is brought back on track, which would mean drastic reduction in aggregate technical & commercial loss, cost reflective tariff and improvement in consumer services including reliable power supply,” former union power secretary R V Shahi told Business Standard.
Shahi said there was a need for an institutional change, including privatisation and franchisees, wherever state-owned discoms had been totally unable to control losses and improve efficiency.
FOR’s move comes close on the heels of the World Bank report on the present state of India’s power distribution sector. The report titled “More Power to India: The Challenge of Distribution”, was released in June and said two decades after the initiation of power sector reforms, an inefficient, loss-making distribution segment and inadequate and unreliable supply had become major constraints to India’s growth.
“The regulatory environment has not sufficiently pushed utilities to improve performance. A lack of accountability, limited autonomy, and constrained technical capacity have restricted the ability of state electricity regulatory commissions to create an independent, transparent, and unbiased governance framework for the sector that balances consumer and investor or utility interests,” the World Bank report noted.
Moreover, ICRA, in its analysis released in July, observed that overall subsidy dependence for FY 2014-15 for distribution utilities in the 16 states (based on the allowed subsidy levels in tariff orders) has also shown an increase by 17 per cent over the previous FY, mainly on account of upward pressure on cost of power supply & continued subsidised nature of tariffs for agriculture consumers. On an all-India basis, subsidy dependence for the state-owned distribution utilities for FY 2014-15 is estimated in the range of Rs 7,20,000 crore, which is estimated to have increased at a CAGR rate of 16 per cent since FY 2010.
The study has been necessitated as operational and financial performance of distribution companies (discoms) has been a major concern. Further, poor billing & collection, high level of distribution losses, increasing cash losses and poor financial management are reported to be plaguing discoms’ performance.
FOR has invited bids up to September 1. It expects the consultant to cover all distribution utilities. Performance of the distribution utilities will be from FY 2009-10 to FY 2013-14. According to FOR, restoration of health of the distribution sector remains critical to success of power sector reforms.
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Shahi said there was a need for an institutional change, including privatisation and franchisees, wherever state-owned discoms had been totally unable to control losses and improve efficiency.
FOR’s move comes close on the heels of the World Bank report on the present state of India’s power distribution sector. The report titled “More Power to India: The Challenge of Distribution”, was released in June and said two decades after the initiation of power sector reforms, an inefficient, loss-making distribution segment and inadequate and unreliable supply had become major constraints to India’s growth.
“The regulatory environment has not sufficiently pushed utilities to improve performance. A lack of accountability, limited autonomy, and constrained technical capacity have restricted the ability of state electricity regulatory commissions to create an independent, transparent, and unbiased governance framework for the sector that balances consumer and investor or utility interests,” the World Bank report noted.
Moreover, ICRA, in its analysis released in July, observed that overall subsidy dependence for FY 2014-15 for distribution utilities in the 16 states (based on the allowed subsidy levels in tariff orders) has also shown an increase by 17 per cent over the previous FY, mainly on account of upward pressure on cost of power supply & continued subsidised nature of tariffs for agriculture consumers. On an all-India basis, subsidy dependence for the state-owned distribution utilities for FY 2014-15 is estimated in the range of Rs 7,20,000 crore, which is estimated to have increased at a CAGR rate of 16 per cent since FY 2010.