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Power reforms gain ground in states

With 40,000 Mw of stalled projects likely to start production soon, states are bailing out discoms and revamping supply network to prepare for the surge

Shreya Jai  |  New Delhi 


Crumbling under decades of accumulated losses, outdated technology and waking up to the fact that power supply decides who stays "in power ", several states are reviving their power transmission and distribution infrastructure.

With demand falling way short of supply, it is clear that this is a problem that needs to be fixed urgently. The country's power generation capacity has reached 295,000 Mw, but 4 million households are still un-electrified. To meet the challenge, states are earmarking substantial amount of money for strengthening supply and availability of power.

Jammu & Kashmir, for instance, has become the first state to come out with a separate budget for the power sector. The state, which faces a power deficit of more than 5.5 billion units annually, plans to tap its natural resources to generate 9,344 Mw of hydro power and has allocated Rs 2,500 crore for its evacuation in 2015-16. "The requirement of the transmission sector for the entire state from the '24x7 Power-for-All' perspective works out to approximately Rs 4,054 crore. The total plan for transmission sector thus would be Rs 6,554 crore," the state's power budget said.

Uttar Pradesh Chief Minister Akhilesh Yadav in his budget for 2015-16 has promised 22 hours of power supply in rural areas and 24 hours in urban areas by 2016. He has also promised to ramp up supply to 21,000 Mw from the current 10,000 Mw. With the state polls bound for 2017, this could be political gimmickry but industry is taking it seriously.

Odisha has proposed to build 4,300 transformers, 860 km high-tension and 1, 260 km low-tension transmission lines during this financial year and has allocated Rs 310 crore for the construction of 550 sub-stations and to upgrade its distribution system.

Following suit
Along the same lines, Madhya Pradesh has increased its provision to the power sector by Rs 1,718 crore over last year, taking the total budgetary allocation for generation, transmission and distribution to Rs 9,704 crore. It is also planning to strengthen its grid system to support the huge step up in renewable power generation: from the current 1,400 Mw, it plans to scale up production to 3,733 Mw.

With around 40,000 Mw of stranded power capacity likely to go on stream soon with coal and gas supplies being sorted out, there is a crying need for a strong grid to carry the increased power supply. Steps are already being taken in this direction.

"There is a lot of business coming in for engineering, procurement and construction companies from Uttar Pradesh, especially its eastern part, Bihar, Odisha, Telangana and the North East," says Sunil Mishra, director general, Indian Electronics & Electricals Manufacturers' Association (IEEMA).

IEEMA expects orders for sub-stations, transmission lines, conductors, insulators and transformers to grow in the months to come. Owing to increased demand from state utilities, the growth of cables, transformers and switchgear has been in double digits in the last quarter.

Most experts are of the view that the sector is waiting to be opened up. "With the advent of public-private partnership, states can now attract significant private investment into their power transmission network by adopting the tariff based competitive bids model. This can be a large business opportunity for the private sector, and a great way for states to strengthen their network and reduce the cost of power purchase," says Pratik Agarwal, vice-chairman, Sterlite Grid, the country's largest private operator of independent transmission lines.

Analysts say with companies such as Adani and Sterlite becoming aggressive in transmission business and several Chinese companies increasing their base in India, the transmission sector is in for some rapid growth.

"If the government is increasing its focus on power generation, then transmission capacity should also match it. 'Build-operate-own-transfer needs to be the functional model for power transmission. Power Grid Corporation, like NTPC , should be an asset owning/ operating company," says Rupesh Agarwal, vice-president, Ernst & Young LLP.

Piyush Goel, the minister of state for coal, power and renewable energy, in a recent interview to Business Standard said sorting out the problems of transmission and distribution companies is the government's prime focus. "Fortunately, one good thing that has happened is that in the last five years, states have understood that when they go back to people to be elected again, they would be judged on their performance," he said.

In line with the Centre's focus, Rajasthan has decided to bail out its financially sick discoms through an innovative fund called the Rajasthan Electricity Distribution Management Bill. This fund will support the discoms financially and help them plan technological improvements. Going a step ahead, Tripura is planning to step up its power distribution and billing system with advanced IT systems.

But not all states are on the road to reform. Mineral-rich Jharkhand and Chhattisgarh, which are bound to witness massive growth with cancelled coal blocks starting operations again, are yet to increase their focus on evacuation of power.

Uttar Pradesh
  • 22 hours power supply to rural areas and 24 hours in urban areas by 2016
  • Power supply to increase to 21,000 Mw from the current 10,000 Mw
  • 1 lakh villages will get electricity supply in 2015-16
Jammu & Kashmir
  • Rs 1 lakh crore to be invested to install 9,344 Mw of hydel capacity
  • Rs 1,187.20 crore has been earmarked for the state's energy department
  • Rs 28.15 crore will be spent on strengthening power infrastructure in the Elephant Corridor
  • Rs 11 crore to be spent on energy conservation and on boosting energy efficiency
Madhya Pradesh
  • Rs 9,704 crore will be spent on generation, transmission and distribution projects
Andhra Pradesh
  • To provide 24x7 power supply to domestic and industrial consumers
  • 14.85 lakh agriculture consumers will get 7-9 hours of electricity supply daily
  • Rs 4,360 crore has been provided for the power sector
  • Rs 12,878 crore has been provided to the energy department in 2015-16
  • Government to bail out discoms whose combined annual loss is about Rs 77,000 crore

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First Published: Wed, May 27 2015. 21:30 IST