THE WEAK LINK

The Centre is looking to reform the power sector, with better regulation and a new tariffpolicy. But if state governments do not fall in line, this could prove to be yet another paper-shuffling exercise

- Anilesh S. Mahajan

Among the more ambitious targets Prime Minister Narendra Modi set for his government in its first term was to take electricity to the farthest reaches of the country. If that driver had a fair degree of success, what continues to hobble India's power sector—and industry that critically depends on it—is a reliable supply at competitive rates. It's not very different for the domestic sector, even though notionally India now boasts 100 per cent coverage. On average, Indians put up with about five and a half hours of load shedding every day, even though India has installed capacity to generate about 370 GW of power and has a peak demand of only about 170 GW. According to the Central Electricity Authority, about half of India’s rural population gets only about 12 hours of power a day.

Experts say the bottleneck is in distribution— reportedly, discoms (electricity distribution companies) are either unable to purchase power or are unwilling to do so for fear of under-recovery of power bills. An indication of their battered financial state came on May 13, when Union finance minister Nirmala Sitharaman announced that, as part of the government’s economic stimulus package, discus would be loaned Rs 90,000 crore to pay off their outstanding dues to gencos (power generation companies). As of April end, discoms owed gencos about Rs 1.17 lakh crore in overdue payments. The accumulated debt of discoms was over Rs 4.5 lakh crore.

On May 16, Sitharaman also announced that Union power minister R.K. Singh would publish a new national tariff policy (NTP) within the next month. Now, Singh says the policy is “ready” and that his ministry will seek the Cabinet’s approval on it. Talking to India today (see