Political consensus needed to save bleeding discoms: Assocham

The government should go for an all-party consensus to enable discoms to adjust their tariffs to recover rising costs on power generation, transmission and distribution, industry body Assocham said today.
The entire power generation capacity of the country is currently functioning at 65 per cent of its rated level as distribution companies have no money to pay for the power they have to purchase from energy generators, the chamber said in a statement.
The power generating companies, therefore, have reduced their generation to cope up with the situation where they have an excess power with no buyer around, it added.

"Therefore, the government should take the initiative to build a political consensus on the imperative of recovering power costs from consumers, otherwise the whole system is in danger of collapse," the chamber said.
The discoms, mostly state-owned, are in such state of financial collapse because the concerned states are unwilling to raise power tariffs to the consumers for different reasons, it added.
"If there is no basic change in the situation and they continue to bleed like this, not only will the distribution system face financial collapse but new investments in the power sector would be discouraged," the chamber cautioned.

It added that there is a need to impress upon the states and all political parties the imperative of adjusting power tariffs to the reality of rising costs with a specific plan to economise on generation costs.
It also commended the Centre's plan for a separate grid supply to agriculture to prevent diversion of supply to other users.
Unable to buy the entire power they need, discoms are restricting themselves to only a portion of the power and are practicing long hours of power cuts as a short-term answer to their predicament, the chamber said.