The state electricity distribution companies (Discoms) sit on a pile of debt aggregating Rs 3 lakh crore. Some of them do not have funds to buy electricity and are in dire straits. It is this situation that the Modi government has capitalised on to cajole and force some of the states (both BJP-ruled and others) to agree to a rehabilitation programme that will not only solve their immediate problems, but also commit them to a more responsible and viable future. Cabinet note on the revival package is ready and will be taken up by the Union cabinet next week. This was announced by Piyush Goyal, minister of state for power, coal and new & renewable energy. He was speaking at the Global Business Forum organised by IIT Bombay Alumni Association in Goa.
But revival packages attempted earlier had failed as the states were notorious when it came to giving up populist measures such as free or heavily underpriced cost of electricity, unsustainable transmission and distribution losses and parking the financial losses that ensued as a result in the balance sheet of the Discoms.
"I am super confident that the problem would be resolved this time and will not recur again," said Goyal. "This is the best way to revive the country's power sector." His confidence, he explained, stemmed from the fact that this policy was not hurried through. It has come about after having discussions with every stakeholder in the system, be it the states, Discoms, banks, fuel suppliers and experts in the field. "Discoms are a pile of white elephants in the room. I have been seized of the problem for a while. I took my time and consulted the stakeholders to come up with a solution. I didn't want to do something in a hurry and fail," he explained. "Every problem has a time when it gets resolved. Discom revival is an idea whose time has come."
Goyal expects the cabinet to take up the policy once he returns from the US (he is leaving for the US on Sunday to negotiate funding for government's green energy initiatives). The policy has a two-prong strategy by which the central government will handhold the Discoms to bring down the current losses through better pricing and more efficient management of the grid while attacking the issue of accumulated losses through relevant financial packages. As many as six states have signed up for this.
Goyal also said that efforts are underway to reduce Discoms’ power purchases cost by making coal available in plenty to power producers. Coal shortages at power plants are history, he said. "Last year, coal production rose by 32 million tonnes as against a 31 million tonne increase over a four-year period between 2010 and 2014. In 2015-16, the increase will be 50 million tonnes. Every power plant has as much as 45 days’ supply," Goyal said. "Today, the problem is different. Power plants are now asking us to stop the supply of coal."
The minister also talked about how the government is working to tackle the demand side challenges in power as well. "We hope to replace 770 million incandescent lamps with LED bulbs in the next three years and this will reduce peak load demand by 20,000 MW and energy consumption by 10,000 crore units and save us Rs 40,000 crore a year," he said.
All these efforts, Goyal said, would help the government achieve its vision of affordable universal access of quality uninterrupted power to all people in the next three to four years. There are 18,452 villages in the country that have no access to power. The government, he said, was looking at both off grid and grid-linked solutions. "In two years from now, not a single village in the country will be without electricity," he said.