Seven state governments, including Orissa and Rajasthan, have evinced keen interest in replicating the Gujarat model of having dual power distribution, as a way to cut down loss from selling subsidised power to farmers and bring back their state electricity boards to profitability.
In the Gujarat model, dual distribution lines were installed to supply power based on paying capacity of the consumers.
The first line will provide continuous electricity at a much higher rate, whereas the second line aimed at farmers will supply electricity for a limited period at a subsidised rate. Gujarat was not only able to cut down the loss but was able to report profit after implementing dual distribution lines.
Thus, if states were to adopt the same approach, consumers will be able to get reliable power supply and state electricity boards could return to profits.
The Forum of Regulators, a representative body of the state electricity regulatory commissions, has asked for the implementation of the Gujarat model in other states. Its working group, consisting of representations from seven states, has forwarded this model as a loss-reduction strategy.
“The forum secretariat has submitted, discussed and accepted the recommendations of the working group. Separation of (agricultural and domestic) feeders too is one of the recommendations,” said a senior official from the Central Electricity Regulatory Commission.
Supply of free or subsidised power to farmers is a sensitive issue for state electricity boards controlled by local governments, as parties come to power keeping this as a major election issue. However, this has resulted in losses for state power suppliers as cost of production increased because of increasing fuel costs (coal and natural gas).
In a bid to cut down transmission losses and optimise the distribution of power in the state three years ago, Gujarat had bifurcated the rural supply where farmers would be given eight hours supply for irrigation on a three-phase line, but rural households would get 24-hour reliable power on a single-phase line.
“We are now providing electricity to farmers on the three-phase line at a cost of about Re 0.80 per unit, while domestic consumers are paying about Rs 4.00 per unit for the 24-hour supply,” said a senior official from the Gujarat Electricity Regulatory Commission (GERC).
This separation of agricultural feeders, which use heavy loads of up to 10-15 horse power (HP) capacity for running pumps from domestic supply, has resulted in additional revenue generation for the state electricity board from increase in duration of power supply to rural households in addition to round-the-clock supply of power to consumers.
“The three-phase line for irrigation has also helped in saving a lot of power as the high-current lines trip in case illegal hooking takes place anywhere in the area,” said a senior official from Gujarat Urja Vikas Nigam Ltd (GUVNL).
By using the strategy, GUVNL has been able to shift its financial position from Rs 1,932-crore loss in 2003-2004 to above Rs 250 crore currently. The scheme has been implemented by a total investment of about Rs 1,200 crore which the state was able to recoup within 2-3 years.
The Transmission and Distribution losses in Gujarat have also dipped from about 32 per cent to about 20 per cent in the same period. In addition, the state has also succeeded in maintaining the provision of subsidised electricity to farmers.
“Because of the bifurcation, we are able to better plan our load and maintain continuous supply. This has also resulted in optimisation of cost of planning the provision of power,” said another official from GUVNL.
Other states have already started their planning for bifurcation of agricultural feeders and thus also reduce losses.
“Although so far no correct description of the Gujarat model has been made available, our objectives to manage distribution in the state includes doing away from a single-phase system. We are looking at converting single phase to 3-phase lines in rural areas as single phase gets overloaded easily and transformers are damaged frequently,” said S K Jaina, member, working group of the Orissa Electricity Regulatory Commission.
Experts agree that Gujarat model will generate profits but efficient monitoring is required to be successful.
“While there are sure benefits of such a scheme like saving of electricity and better managing of the load, but the trouble is that not only it requires a lot of money but also an efficient monitoring of the agricultural consumption,” said Shubhranshu Patnaik, a senior analyst from Pricewaterhouse Coopers, an accounting and advisory firm.
