Centre's electrification drive sees surge

Distribution schemes push growth of electrical equipment industry, healthy pipeline expected

Low-capacity utilisation maybe a key challenge for power plants but the govt’s push for efficient delivery of electricity through focus on transmission and distribution is spawning opportunity for the industry. In the last of a four-part series, Business Standard takes a look at the pace of electrification and the business it has generated

The two flagship schemes for electrification, Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS), have got a surge in their budgetary allocation for the coming year, of 43 per cent and 30 per cent, respectively.

While conventional power generation has taken a back seat, distribution is coming to the fore with these two projects, and has spurred substantial activity in the electric equipment sector. EPC (engineering, procurement, construction) contractors are looking at the tremendous demand coming from these two schemes, translating to a robust order book for the sub-33 kilovolt or distribution sector equipment, say insiders. DDUGJY and IPDS are the rural and urban electrification drives, both announced in the present government’s first full Union Budget, of 2015. All electrification schemes of the earlier government were subsumed in these two.

Disbursement to states under these was slow in the past three years. Government officials claim that in IPDS or its erstwhile R-APDRP (Restructured Accelerated Power Development and Reforms Programme), progress was minimal before 2014. 

In 2005, when the recent rural electrification drive was started, the villages identified were about 600,000. This has reduced to 5,634 villages remaining to be electrified, as of now. The plan, then called Rajiv Gandhi Grameen Vidyutikaran Yojana, was renamed DDUGJY by the new government in 2014, and some other projects subsumed in it. The Centre appointed around 18,000 field engineers in the first phase of Grameen Vidyutikaran (GARV-I), launched on October 14, 2015, to check if states were using the allocations. As electrification doesn’t mean each household in the village has a power connection and a steady supply of current, the central government launched the second phase of GARV in November 2016. The GARV-II monitoring system would provide details of metering, power supply, and power outages for all the households in 600,000 villages.

Of the budgeted Rs 1.08 lakh crore till now, close to Rs 44,000 crore has been sanctioned to states. Rural electrification sped faster than urban, mostly because of the political stakes involved. Urban electrification includes system strengthening, information technology (IT)-enablement of existing systems and 100 per cent metering. The progress has been slow but, in the government’s perspective, “impressive”.

“With more than one programme running under IPDS, the quality of power in urban areas is improving. Almost all states are in sync with our plan that the urban sector needs more investment for robust power distribution infrastructure,” said P K Pujari, secretary, ministry of power.

IPDS is the only scheme where the central grant is more than 60 per cent. Of the 1,228 towns needing system strengthening, 738 have been completed in the past three years. IT enablement needs to be completed in 4,041 towns by 2019. As many as 1,405 have been declared ‘Go Live’ or 100 per cent IT-enabled power supply infrastructure. 

Of the Rs 25,848 crore sanctioned for IPDS or the erstwhile R-APDRP till date, Rs 2,113 crore has been disbursed.

Officials say a lot of time was lost in the past year in the bulk procurement process for electric equipment under IPDS. This eventually didn’t fructify, even after the bidding.

In a bid to reduce the final power rates and weed out arbitrary procurement of equipment by states, the central government decided to standardise price and specifications for last-mile equipment in the distribution segment. However, state governments’ resistance to a uniform norm forced the Union ministry to retreat.

The sales of transformers rose 16 per cent over a year before during April-December 2016, circuit breakers by 49 per cent and transmission line towers by nine per cent.

The government aims to create infra to monitor 24,000 feeders, for improving quality and amount of power supply in urban households. The ministry is also expecting disbursement to pick up in the coming year.

Is the Govt Investing Enough? PART-IV                                                                                                                        Series concludes