Despite fuel constraints, the electricity sector grew by 9.8 per cent in July-September. Union power minister Sushilkumar Shinde explains his view points in an interview with Sanjay Jog. Excerpts:
What are the factors responsible for growth in the electricity sector despite slow down in other sectors?
The accelerated pace of capacity addition in the last 5½ years is largely a consequence of several key measures initiated by my Ministry. These are related to augmentation of domestic manufacturing capacity of power plant equipment, adoption of supercritical technologies, liberalization of the Mega Power Policy, instituting a robust monitoring mechanism, and enhancing the availability of skilled and trained manpower. A strong review and monitoring mechanism has been put in place. Rigorous monitoring of projects is held at different levels including by Ministry of Power, Central Electricity Authority (CEA), Power Project Monitoring Panel and Advisory Group under my chairmanship. Reform measures undertaken during the last few years have facilitated active participation of the private sector in the power sector. Private sector participation which was 10% at the end of 10th Plan has gone upto 30% at present and will be more than 50% during the 12th Plan. As a result of these initiatives, we have added more than 60,000 MW during the last 5½ years. More than 80,000 MW capacity is under construction at present for benefit during 12th Plan.
However, fuel availability continues to be a major issue. Can you throw some light on this aspect?
Thermal generation (coal, lignite and gas) continues to remain mainstay of electricity generation programme in the country with approximately 83% share in the generation from installed generating capacity of about 65%. Coal based generation forms bulk of electricity generation,contributing approximately 2/3rd of the total electricity generation in the country. However, inadequacy of coal from domestic sources was providing to be a hurdle in meeting the growing requirements for electricity generation in the country and capacity of gas based stations was also under-utilised due to the lack of availability of adequate quantities of gas. Enhancing fuel security of coal and gas based stations was, therefore, of paramount importance. For ensuring fuel security in the medium term, most of the coal based generation projects under construction for benefits during 11th and 12th Plan have either been given coal linkages or coal blocks have been allocated to them. In order to enhance fuel security for the thermal power projects in operation, thrust was given to the import of coal to bridge the gap between requirement and domestic availability and all out efforts were made to get gas allocation for the existing projects enhanced. As a result of the Ministry’s consistent pursuance, import of coal by power utilities increased from 4.5 million tonnes (MT) in 2004-05 to 30.5 MT in 2010-11; and 35 MT is being imported during 2011-12.
However, distribution sector continues to reel under a major crisis. Can you tell us the present scenario?
Distribution is the most important, but also the weakest link in the entire power sector value chain. As the only interface between utilities and consumers, it is the cash register for the entire sector. Therefore, it is essential that the distribution sector should collect all revenue based on notified tariff. In turn, the tariff notified must be such that it recovers all the expenses of the distribution licensee with room for reasonable profit. Under the Indian Constitution, electricity is a Concurrent Subject and the responsibility for distribution of supply of power to rural and urban consumers primarily rests with the States. This constrains the ability of the Central Government to intervene effectively for improving the financial health of the distribution utilities. In many States, this segment is afflicted by irrational tariff structure, high AT&C losses, poor governance, inadequate and antiquated infrastructure. Add to this is the issue of poor revenue collection by distribution companies, unmetered consumers, inadequate energy accounting and auditing, poor health of e-distribution system with overloaded lines and transformers and frequent breakdowns. The poor financial health of the utilities not only impede much needed investments for the upgradation, strengthening of expansion of the sub-transmission and distribution infrastructure, but also has adverse implications on the investments in generation and transmission segments.
What initiatives are taken to expedite reforms in the sector?
The Ministry is pursuing a five-fold strategy for improving governance standards and transparency across power value chain, reducing AT&C losses, technology upgrades, tariff rationalisation and strategic investments.