Modi govt needs to fast-track power sector reforms

The Modi government needs to fast-forward power sector reforms by purposefully putting paid to mounting distribution losses of state utilities pan-India with clearcut policy initiatives and follow-through action. The poor performance of electricity distribution companies (discoms) in states like Uttar Pradesh and Tamil Nadu poses systemic risks, hampers quality supply and jacks up the power infrastructure deficit. And the Centre needs to invoke specific sections in the Electricity Act, 2003 to speedily transform the situation on the ground. Reports say that the Centre is seeking instead to amend the Electricity Act, by demerging ‘carriage from content’ so as to have separate licences for the wire business and the actual supply of electricity, to bring about greater transparency in the whole process.

However, the marginal utility of the legislative changes now proposed is questionable. The fact of the matter is that several state governments have done well, using extant provisions in the 2003 Act to overhaul power utility finances, including by separating feeders for agricultural and domestic supply in rural areas. The Act also empowers the Centre, or specifically the Central Electricity Authority, to direct and advise state power utilities to rationalise crosssubsidies and follow norms as per the national tariff policy. Besides, sustainable utility bottomlines would incentivise “open-access” and reform the market for power, with multiple suppliers competing for custom, with adequate line capacity in place. The fact remains that openended subsidies, giveaways and moribund utility finances really make no sense.

Ratings by CARE show discoms in UP as the worst-performing, with those in TN close behind. Aggregate technical and commercial (ATC) losses, euphemism for plain theft of power, are a massive 40% in UP. Predictably, the cross-subsidy levels there are sky-high. Reckless populism is perverse incentive to steal and overdraw power. Instead, states need to strive to deliver quality power at competitive rates to shore up industry and services.

Tata Power installs 36 bio-gas plants in Mundra

Tata Power Company under green village concept successfully installed 36 Bio-Gas plants across 8 villages. The company has undertaken the installation of Bio-Gas plants under project 'Annapurna' in Mundra and Mandvi in association with Tata Power Community Development Trust (TPCDT).

With this initiative, Tata Power aims to promote the use of Household Bio-Gas by creating awareness on the optimal use of cow dung. Being considerably cheaper than conventional energy sources, the daily input in each Bio Gas plant is nearly 40 KG which enables cooking for a family of 5-6 people.

The total cost of each plant is Rs 26,200, of which Rs 18,000 was invested by Tata Power with Rs 8200 contributed by the community. The used cow dung can be further reused as fertilizer, whereas maintenance of the unit is simple and stress free. The unit has also resulted in monthly savings of nearly Rs 300 which was earlier spent on wood and kerosene. Additionally, the unit assists in protection of the environment as well as health of the villagers as it avoids the pollution caused by burning wood. This reduction in pollution further protects the families from future ailments such as asthmatic problems, cataract etc.

Speaking on the initiative, K K Sharma, CEO and ED - CGPL stated that ''At Tata Power we understand the need for the holistic development of community. The Company has constantly aimed to ensure effective and sustainable development which enables us to create a world which is conscious of its responsibilities towards the environment. The Bio-Gas plants equip us with a bouquet of benefits while utilising readily available natural resources which protects villagers from chronic diseases arising out of burning wood and coal. We aspire to work collectively for the augmentation of the society and will continue implementing such initiatives in the future. We would like to take this opportunity to thank the Tata Power team, Tata Power Community Development Trust and all affiliated parties for their support and participation.''

Shares of the company declined Rs 0.4, or 0.43%, to trade at Rs 93.35. The total volume of shares traded was 429,930 at the BSE (3.28 p.m., Monday).

Power restored to 99 per cent of domestic customers

Power has been restored to almost 99 per cent of the domestic customers in the three districts of Visakhapatnam, Srikakulam and Vizianagaram.

The three districts plunged into darkness, after cyclone Hudhud made its landfall on October 12, and it took over 9,000 men to restore power in just about 18 days, said AP Energy Secretary Ajay Jain.

In total, there are about 23.73 lakh domestic consumers in the three districts, and power has been restored to about 23.50 lakh. “The remaining 23,000 odd consumers will be connected by Monday,” assured Mr. Jain.

As far as agriculture connections are concerned, 28,000-odd are yet to be connected and according to the Energy Secretary, many of the farmers have requested not to take up work, as paddy is in its harvest stage. “But we shall connect them by November 10,” he said.

Of the 23,000-odd yet to be connected, domestic connections, about 11,469 connections are in S.Kota and Vepada mandals of Vizianagaram. “We have achieved 100 per cent connectivity in Srikakulam and in Visakhapatnam city and we have about 800 connections left. In Visakhapatnam district, power is to be restored to about 4,600 and 5,500 connections in Narsipatnam and Paderu areas,” Mr. Jain told mediapersons. Divulging future plans, he said plans were afoot to procure new machinery for erecting poles. “This machine has the capacity to drill and erect over 200 poles in a day. We plan to have this machine, which cost about Rs. 6 lakh, in all the vulnerable divisions of APEPDCL. This apart we are going ahead with the underground cabling network,” he said. APEPDCL has already got a sanction to the tune of $ 100 million from the World Bank for underground cabling and gas insulated indoor sub-stations. “As a pilot project we shall take up the work in the most vulnerable areas,” said Mr. Jain.

The 400 kv Kalapaka link has been restored to Gajuwaka 132 kv sub-station and the estimated loss to the power sector in the aftermath, is to the tune of Rs. 1,200 crore. So far about Rs. 150 crore has been spent on restoration work.

Catch-22 situation for Telangana, Andhra Pradesh solar power bids

Hyderabad: Both AP and Telangana are planning on developing solar power in a bid to create a larger energy pool but experts say that entering into the traditional 25-year PPA (Power Purchase Agreements) will be a loss-making move, as the cost of power is expected to go down in the future.

Preference to solar power projects under the state Gencos (AP Genco and TS Genco) should thus be given. While power sector insiders have pointed out several times that the preference to private sector projects has hit both the power sector as well as the consumers hard, there is need to give preference to Genco projects.

“If in future the costs comes down, discoms will be paying the higher costs for a long time. Once entered into PPAs, the discoms will have to purchase power from the producers. The Electricity Regulatory Commission has given orders under which discoms have been mandated to purchase a minimum of 5 per cent of their energy needs from non-conventional sources, which means irrespective of cost, even when cheaper power is available, first priority is given to that percentage,” said power sector expert, P. Venugopal Rao.

As per experts, a better way would be to extend subsidy to the individual Gencos by the state governments, which can be translated to subsidies for end consumers.

“The Gencos can be given subsidies to set up solar parks, to the extent that they get the subsidy that has to be passed on to consumers. Also by using solar power for agricultural needs, power supply can be given at a single stretch to farmers and the problem of staggered timings can be avoided,” added the expert.

There is also a catch in encouraging solar power for all segments as in case of captive consumption, those who can afford to set up a solar power plant will generally have a higher consumption capacity.

This is likely to be true even in the domestic sector and especially true for the industrial and commercial sector. In case of a consumer setting up a captive plant, the state will also lose out on the cross subsidy to that extent.

Coal block auctions likely by December, power cos to get priority

The coal ministry may commence the auction of coal blocks by early as December this year, highly placed sources in the government told HT. The Cabinet Committee of Economic Affairs (CCEA) is expected to approve the plan soon.

As 79 out of the 214 blocks de-allocated by the Supreme Court relate to the power sector, the move is expected to help power projects with a combined capacity of 40,000 MW, ease chronic power shortages over time and give a fillip to the government’s efforts to revive the economy. Investments of Rs. 2 lakh crore are stuck in these projects.




At present, Indian public and private sector banks have a combined exposure of close to Rs. 5 lakh crore in various coal and gas-based power projects. An early auction of coal blocks will provide fuel linkages to stressed power projects and ease power shortages. A steady and quality supply of power is a necessary pre-condition for growth.

“The decision vests with the CCEA.... as soon as the approvals come, we (ministry of coal) will commence auction of coal blocks, by December this year,” the source told HT.

“Those power projects that don’t get a coal block in the auction will be considered for allocation of coal by Coal India Ltd. CIL will import coal to meet any shortfall in its own production and pool this with a part of domestic production,” he said.

The total installed power capacity of the country is 250,000 MW. Coal-based plants account for 150,000 MW or 60% of this.

Coal shortages have short-circuited India’s power capacity addition plans. Coal production could not keep pace with demand from the power sector: in the last 5 years, demand grew 87%, but coal output grew a mere 15%.

Adding to this low production were Letters of Assurance (LoAs) for coal linkages the coal ministry in the previous regime had issued to power projects. Upto 2010, LoAs were issued for projects equivalent to 108,000 MW, though coal available was sufficient to generate only 60,000 MW, or 65% of the coal requirement if power plants operated at 85% of capacity.

As on date, Coal India has signed Fuel Supply Agreement for about 74,000 MW. That still leaves about 14,500 MW already commissioned or to be commissioned in the 12th Plan, without coal linkages provided.