Penniless power sector yet to act on govt initiatives

Discoms saddled with Rs 70,000 cr annual losses; no tender issued for transmission

The past year was a good show in numbers for the power sector, possibly because of having a chartered accountant as power minister. Generation grew 8.4 per cent and the peak deficit was down to 3.5 per cent in 2014-15 from 4.5 per cent in 2013-14.

The government facilitated bailouts for around 42,000 Mw of stuck projects through an auction of coal blocks and a new gas supply mechanism. But industry executives point out there is no investment pipeline for the 13th Plan period, 2017-22.

Just before bids for the Cheyyur project in Tamil Nadu and the Bedabahal project in Odisha were to be opened last year, private players withdrew, citing policy hiccups. Power Finance Corporation had to cancel the auctions. Of the four UMPPs allotted earlier, Tilaiya is in limbo, with Reliance Power terminating power purchase agreements with 10 states.

"The government has not been able to end the stalemate in generation. No one is willing to bet on new generation projects. The Centre has not been able to prevail on states to reform their electricity distribution," said a sector expert requesting anonymity.

So far, no scheme of the National Democratic Alliance (NDA) government has been received well by the industry. An executive with a company, with interests in power generation, transmission and distribution said, "The power sector just saw names of its key policy programmes being changed. Can the sector bet millions on names"?

Some states have joined the bandwagon in principle but major ones are yet to come on board for IPDS and DDUGJY.

The peak power deficit in the southern grid is 22 per cent and in the north-east is 12 per cent. The west has a 14 per cent surplus. Distribution companies across India are cash strapped, adding Rs 70,000 crore to their cumulative losses every year. No state except Kerala has issued a tender for a power purchase agreement since March 2013. The reasons being, weak distribution companies and lack of power transmission.

Not a single transmission project was awarded to a private company last year while the project backlog at state-owned Power Grid Corporation kept climbing. Projects adding up to Rs 20,000 crore, meant for competitive bidding, are yet to be tendered. Power Minister Piyush Goyal last week, promised to put transmission projects worth Rs 1 lakh crore up for auction to private players.

"The power sector has suffered because of the monopoly of public sector undertakings. India must prepare an efficient transmission network in time, at a reasonable cost, to accommodate the projected higher power generation," said a power market expert.

Known as an energy enthusiast, Prime Minister Narendra Modi attended eight events, in the first four months of his term, inaugurating power projects. After last year's Assembly elections, his speeches seem to give energy issues a miss.

South India is facing a power crunch due to transmission snags. High consumption states like Haryana, Uttar Pradesh and Bihar have days of power cuts.

These states are not on board for central schemes. Financial restructuring, for distribution companies, was not allocated any grant in the Budget as the NDA government plans to roll out smart grids. "Pumping coal and gas solves one side of the problem. There are no buyers for surplus power. Distribution companies are in dire need of revival. If Gujarat's distribution companies can be profitable, why not those in other parts of the country?" asked an executive with a state-owned electricity distribution company.