24x7 power should be norm, not scheme: Prabhu-led group

Panel suggests opening transmission & distribution for private companies, PPPs at the state level

Even as the government has announced its intent to strengthen power supply in India, the ‘Advisory group for integrated development of power, coal and renewable energy’, led by Railways Minister Suresh Prabhu, has said: “Power supply for 24 hours should be a norm to be followed literally”, and not a scheme. It has asked for renewed and enhanced focus on transmission & distribution (T&D), as power generation has reached a tipping point.

“Supply of power could obviously be increased because the country has achieved a reasonable level of installed capacity, which is rising further. But everything will come to nought if the distribution sector continues to be managed in the manner that it has been so far,” says the advisory group’s report, which Business Standard has reviewed.

24x7 POWER FOR ALL: THE WAY AHEAD

• Transmission infrastructure should stay ahead of generation
• New transmission projects need to be identified, bid out soon
• Open transmission & distribution (T&D) for equal private sector participation
• Make transmission plan for 20-25 years
• Strengthen T&D across the country in 5-7 years
• Appropriate financing, capital restructuring of state utilities
• Distribution sector needs PPPs and increased private investment
• State-level transmission and sub-transmission will pave the way for national transmission system

The committee has emphasised that availability of transmission infrastructure has to be ahead of power generation, so that the incidence of transmission bottlenecks is eliminated.

The total investment for development of transmission system is estimated at about Rs 2 lakh- crore. By 2018-19, an additional investment of Rs 1.2 lakh-crore will be required.

So, the committee has laid stress on private participation in T&D as an imperative. “While the proportion of generation capacity by the private sector is of the order of 35 per cent, the private-sector transmission capacity is only three per cent. This needs to be enhanced. New projects need to be identified and bids offered,” says the report. Hinting at a decrease in Power Grid Corporation’s monopoly, the committee has suggested apart from the reserved list of projects given for strategic reasons, the projects coming to the state-run giant should be as few as possible.

“Beyond this small list, all other projects should be opened up for development by the public, as well as the private sector. It should be prepared at the earliest, as this will help accelerate the pace of development of transmission projects,” says the report.

The high-powered committee has advised the best way to tackle the power supply situation in the country is to have a time-bound plan to strengthen the transmission and sub-transmission infrastructure. It says: “Distribution sector reform holds the key to ‘24x7 power supply’, and it needs institutional changes, including privatisation and public-private partnerships.”

The annual financial losses of state utilities stand at close to Rs 80,000 crore. The committee has suggested the state governments look at alternative strategies, such as capital restructuring, partial takeover of load and regulatory intervention for cost-reflective rates.

“In the states where access is already reasonably good, the target for connected loads could be one year. In the next category (the states where access is not so good), it could be two years; and in the last category, three years,” says the report. Overall, the target for transmission to strengthen even in the remotest corners of the country is five to seven years.

The committee has also asked for a long-term transmission plan, of 20-25 years, with a mechanism for close monitoring of development.

“The mechanism to identify critical transmission constraints, formulate specific projects and have those executed in the most effective manner, needs to be put in place at the earliest. Guidelines will be issues by the power ministry within a month,” says the report.