“Power distribution sector needs reforms”

As electricity is core for all developments, therefore without distribution reforms in respect of market conditions, desired economic development may not be achieved. Manoj Kumar Upadhyay, Deputy Adviser (Energy & International Cooperation Vertical), NITI Aayog.

Manoj Kumar Upadhyay has been working on government policy & regulation in environmental economics & climate change, renewable energy generation, conventional energy generation, transmission & distribution system, allocation & supply of coal, gas and petroleum products. In an interview with Subhajit Roy, he suggests some strategies for improving economics of power distribution sector. He also explains some of the top priorities as far as power sector is concerned.

What’s your take on the recent status of power sector in India?

Power sector is doing very well despite the distribution companies (DISCOMs) financial stress. During April to August, 2019, the all India peak demand was 1,83,804 MW and peak demand met was 1,82,533 MW. The peak deficit in the country was 1,271 MW (0.7 per cent) during the same period.

During April to August, 2019, the electrical energy required in the country was 5,79,154 MU and energy supplied was 5,76,127 MU. The energy deficit in the country was 3,018 MU (0.5 per cent) during the same period.

The majority of the states are supplying 22 to 24 hours electricity to industrial consumers, 20 to 22 hours to urban area domestic and commercial consumers, 18 to 20 hours to rural area domestic and commercial consumers and 8 to 10 hours to agriculture consumers in Rajasthan, Gujarat, Andhra Pradesh, Haryana, Punjab, Karnataka, Maharashtra and Madhya Pradesh where agriculture feeders are segregated. Under Saubhagya scheme, 99.99 per cent households are already electrified.

As on 30th September, 2019, the all India installed capacity was 3,63,369 MW. The total installed capacity includes 82,588 MW renewable energy, 45,399 MW hydro power, 6,780 MW nuclear power and 2,28,601 MW thermal power (1,96,894 MW coal-based power, 6,260 MW lignite-based power, 24,937 MW gas-based power and 509 MW diesel-based power).

Though we need to improve on tariff structure of different consumer category and cross subsidies, the proposed tariff policy, 2019 is taking care of the lot of issues of tariff reforms and distribution sector reforms. Ministry of Power is also preparing ‘Vision Document’ of power sector which will not only provide roadmap for current energy transition but also provide pathways or solution for future as well.

What are some of your top priorities as far as power sector is concerned?

Priorities of power sector are: Structural reforms of DISCOMs increasing clean energy share in total electricity mix, achieving renewable energy targets and energy efficiency targets, award of power sector project on TBCB (tariff-based competitive bidding) basis specially transmission project, promotion of energy storage solution for auxiliary services and renewable energy integration to the grid, increasing investment in renewable energy and distribution sector, creation domestic manufacturing capacity for power sector requirements.

The resolution of stressed thermal assets remains slow. What action you would suggest to resolve this issue?

I will say it is not slow – more than 20 GW capacity has been streamlined. The apex committee constituted for it has given recommendations, Ministry of Power is implementing the recommendations.

Despite the bailout of Rs 2.32 lakh crore debt under the UDAY scheme, there’s a huge outstanding from DISCOMs. What’s strategies you would suggest for improving this economics? What steps you would recommend to make power distribution sector more viable?

First, UDAY was not a bailout package, it was a financial restructuring plan. UDAY has shown good result in some developed states, but largely state DISCOMs situations are same as it was pre-UDAY or it has deteriorated.

Now time has come when states need to adopt three models – complete privatisation, concession based public-private partnerships (PPPs) and franchise to restructure the DISCOMs. States may also create separate DISCOMs for cities with population above 25 lakh including urban agglomerate areas for viability of the DISCOMs. As electricity is core for all developments, therefore without distribution reforms in respect of market conditions, desired economic  development may not be achieved.

(The views expressed here are the spokesperson’s personal and do not represent the views of either the Government of India or NITI Aayog)