Kevadia (Narmada): The power sector is going through troubled times and according to a recent RBI report, the total debt burden of India’s states is expected to touch Rs 52.52 lakh crore by the end of 2020 fiscal, an 11.5% rise from the previous year. One of the major reasons for this is the indebtedness of power distribution companies or discoms. Union power minister R K Singh has a talk with TOI’s Maulik Pathak on the situation. Edited excerpts:
The government is working on a new scheme for discoms with loss reduction trajectories for each state. Can you elaborate?
So far, we had the Ujwal Discom Assurance Yojana (UDAY) which laid out the trajectory for loss reduction of discoms. According to the scheme, if you follow the trajectory, we will give incentives where part of your loan will be turned into transaction. I am changing this somewhat. The term of UDAY is over. It has led to some gains. The losses have dropped from about 21% to 18%. We have not reached the level of reduction that was envisaged. So, we are now working out a fresh trajectory which will reduces losses to below 15%. This is to be done in a time-bound manner. For strengthening of discoms, we had two different schemes for strengthening – Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS). We will combine these and make provisions where we will provide money to states for taking action to reduce the losses. We’ll also provide money to states for filling the gap for infrastructure required for 24×7 power supply.
What will it be called?
Some people are calling it Uday-2 but we are not calling it that. We haven’t finalized a name yet.
Overall, we are looking at bringing major structural changes in the sector. After connecting every village, we are now focusing on providing round-the-clock power supply to all.
The government has also been working on plans to give multiple choices to power consumers…
Consumers got to have choices. If there are multiple licensees, they will compete for service. Existing distribution companies we feel should retain control of wire business, that means the distribution system remains with them and they will get the wheeling charges. So discoms will retain distribution system and make available power in wholesale to the supply licensee who will have the responsibility for giving supply to different consumers and servicing those consumers. Supply will be unbundled from distribution, carriage. This is what we envisage. A scheme on this is being drafted.
The sector is facing multiple challenges from inefficiency of discoms, bank finances, stressed assets and capacities lying idle …
Land availability remains a major challenge for the sector. There are different reasons and we are dealing with them. In the case of coal fired projects, we are in talks with banks to find a solution for stressed assets. We have also received complaints from a state regarding availability of coal and have taken it up with the coal ministry. The fluctuating prices of LNG have been a cause of concern for gas-based power projects. But the future is bright. We need hydro and gas-based projects to balance with renewable generation. We are counselling states about the sanctity of power contracts after a couple of them were found to be dishonouring PPAs. Also, states cannot charge Rs 8-9/unit to industries for the power that they get for an average of Rs 3.5 per unit. This is hurting investments, it is hurting jobs. States have to clear dues of power generation companies to boost investor confidence and draw investments.
Prime Minister Narendra Modi recently announced India’s renewable target of 450 gigawatt at the United Nations Climate Action Summit …
We are very much on track to achieve the target of 175 GW by 2022 for which a clear roadmap has been drawn. The ‘Kisan Urja Suraksha evam Utthaan Mahabhiyan (KUSUM) scheme, where farmers can not only generate power using solar and even sell surplus power to discoms is under way. So far, only 1.75 million units have switched to solar for their irrigation pumps and 1 million are connected to the grid. We intend to have all the irrigation pumps in the country switch to solar in the next three years. Solar irrigation pumps will be a big thrust area for achieving the 450GW target.