Power sector may turn unviable if losses not checked: PM

The power sector could trip the country's growth story if states do not check the losses of power utilities that totaled a staggering Rs 40,000 crore last fiscal, Prime Minister Manmohan Singh said today.

"The power sector is particularly important if we wish to achieve 9 per cent growth...Total loss in 2009-10 is estimated at Rs 40,000 crore...Unless corrected it will make the whole power sector unviable," Singh told a meeting of the National Development Council (NDC) here.

He attributed these losses to low levels of tariff for some categories of consumers and high technical and commercial losses.

India has one of highest transmission and distribution losses in the world. It lost 30 per cent of the total power produced (over 160,000 MW) in transmission and distribution, which in monetary terms is estimated at Rs 45,000 crore for the year ending March 31.

"I would therefore urge Chief Ministers to give this problem their personal attention," Singh said at the meeting, attended by most of the CMs.

The Prime Minister said since investment in generation and transmission depends upon the ability of the distribution companies to pay, these losses are simply not sustainable.

He said corrective steps needed in this area lie entirely in the domain of the states.

Against the target of 78,000 MW in the 11th five year plan period (2007-12), the mid-term appraisal of the plan suggests that the generation capacity in the 11th Plan is likely to expand only by 62,000 to 64,000 MW.

"Though short of the 11th Plan target of 78,000 MW, it will be nevertheless three times the capacity that was added in the 10th Plan," the Prime Minister said.

His economic advisory council had yesterday in fact ridiculed the shortage of expansion in power sector during the current plan period.

"We would be lucky to get 62,000 MW by March 2012. This rests on large capacities being commissioned in 2010-11 and 2011-12," says the economic outlook for 2010-11, released by the Prime Minister's Economic Advisory Council.