WB report points out urgent need for power sector reforms

Underlining the urgent need for reforms in India's power sector, a World Bank report says that to ensure 24x7 power supply to citizens under the Modi government's 'power for all' initiative, utilities would have to strengthen their transmission grids and distribution infrastructure, and enhance billing and collection systems.

Highlighting the importance of reforms in meeting the demand, Sheoli Pargal, economic advisor at the World Bank and author of 'More Power to India: The Challenge of Distribution', said in Hyderabad today that strengthening the transmission and distribution infrastructure was crucial to revitalise the power sector and make the power for all programme successful.

Addressing a press conference outlining some of the key findings in the report, she said subsides are acceptable as long as the government facilitates the functioning of the state-run power utilities.

Presenting the World Bank perspective on Andhra Pradesh (before it was bifurcated), she said AP needs to ramp up investments across the value chain.

On the impact of subsidy on other sectors, the study estimates that 15,000 hospitals and 123,000 schools could have been developed in AP alone if the power sector had no pre-empted these funds.

Mani Khurana, energy specialist at the World Bank, highlighted the need to improve operational and financial efficiency in distribution through a multi-pronged approach, with the use of information technology, energy audits, reduction in transmission and distribution losses and ring-fencing supply to the agriculture sector with a transparently determined and administered subsidy.

The study, initiated by the Department of Economic affairs and Ministry of Power, covers various States of the country and mentions how the financial health of the sector is fragile, limiting its ability to invest in delivering better services.

Over the last decade, the sector needed specific periodic rescues from the Centre through a bailout and a restructuring package.