24x7 supply a priority: PowerMin to new govt

Power ministry would like to take decision on ensuring financial viability of loss-making distribution companies

In a recent presentation to Prime Minister Narendra Modi, the power ministry listed ensuring round-the-clock electricity supply and mitigating power plants’ fuel shortages among its priorities. It added other important steps to be taken included ensuring the financial viability of loss-making distribution companies, tapping India’s vast hydro-generation potential and amending the Electricity Act to bring about a slew of reform measures, sources said.

Providing 24x7 power supply to consumers will require adequate capacity addition, fuel availability and quicker green clearances, apart from a switch to renewable sources and building additional transmission infrastructure, the ministry has said. It proposed making it mandatory for distribution companies to progressively increase supply to rural areas, as well as rationalising of rates by state regulatory commissions. Also, to ensure the viability of distribution companies, it suggested cutting aggregate technical and commercial losses from the current 27 per cent to 15 per cent.

On the fuel front, the ministry wants to finalise coal linkages for projects in the 13th Plan; construct three identified rail links quickly for evacuation; revisit the cancellation of coal allocations for projects at advanced stages of construction; and restrict the rise in rates due to a proposed gas price increase, with financial relief to stranded projects.

The ministry has also said the sector needs the “next wave of reforms”, including increasing competition in distribution by separating the wire business of utilities from retail supply; enforcing more ambitious renewable purchase obligations; timely rate revisions and enhancing penalties for non-compliance of grid discipline.

To promote hydro power projects, the ministry has sought a boost for connectivity infrastructure in hydro-rich states such as Arunachal Pradesh. It also sought a special financial package for generators to enable long-term financing for reduction in initial rates, as well as a dedicated fund for financial support.

As its major achievements, the ministry has listed huge capacity addition, a financial restructuring package for distribution companies and the decision to allow the pass-through of imported coal costs.

It said lower coal production, delays in green clearances due to the ‘no-go’ policy and the grid failure of July 2012 as concerns.