Modi's meet on fixing 'weakest link' in electricity for all

With electricity distribution seen as the weakest link in India's power sector and the debt of these utilities shooting beyond Rs.300,000 crore, Prime Minister Narendra Modi chaired a meeting on Monday on how to resolve the issue, crucial to "power for all" plan.

"The prime minister met this morning (Monday) officials of power utilities, especially discoms, to take stock of their performance and the issue of increasing debt," an official source here told IANS.

A World Bank study conducted at the request of the government said despite the impressive strides in the Indian power sector, distribution to end-consumers remained the weakest link.

Expressing concern over the fragile financial health of such discoms that was preventing fresh investments for better services, the bank said the total accumulated losses as in 2013-end for the sector stood at Rs.290,000 crore, or 3 percent of the country's gross domestic product.

"These losses are overwhelmingly concentrated among distribution companies and bundled utilities -- state electricity boards (SEBs) and the state power departments," said the study, adding this had pushed up the power sector's debt to over Rs.500,000 crore.

"Around 70 percent of the sector's accumulated losses in 2013 came from the states of Uttar Pradesh, Rajasthan, Tamil Nadu and Haryana. Uttar Pradesh alone accounted for 27 percent of the sector's accumulated losses," it said.

Power Minister Piyush Goyal said last month that the central government cannot be considered as a bailout bank for helping debt-ridden distribution companies and states will have to find a way out of the crisis.

Faced with acute financial stress, many of these discoms are unable to buy power.