CII calls for urgent reforms in power distribution

Concerned about India's perennial electricity shortage that is hampering economic growth, the Confederation of Indian Industry called for reforms in the power sector, particularly pointing out the need to curtail transmission and distribution (T&D) losses – virtually a euphemism for illegal diversion and theft of power.

Losses of state electricity boards (SEBs) were at over Rs1,00,000 crore in the 2009-10 fiscal, and account for a large proportion of the fiscal deficit and subsidies in state budgets, increasing the burden on state finances without coming anywhere near providing 24x7 power for all, CII said in a report released on Sunday.

Combining theft and agricultural subsidy, on an average almost 40 per cent of the power generated has little or no cost recovery, imposing burden on the other consumers, CII points out.

While the government is going all out to increase generation capacity (including building controversial mega-nuclear plants) the financial situation of the distribution sector, which is the cash-generating segment of the power chain, is dismal. ''The key issue facing the SEBs is cost-tariff mismatches. While there have been no substantial tariff revisions in the past five or six years, power procurement costs have risen sharply,'' the report added.

 ''The financial loss has been estimated at 1.5 per cent of the national GDP. This will act as a major deterrent to the private as well as global investments in the sector,'' CII director-general Chandrajit Banerjee said while releasing the report in New Delhi.

With mounting losses, the ability of the SEBs to buy power is also curtailed, leading to constant load shedding [power cuts], he added.