24X7 Power for All

Is It Impossible to Achieve Despite Implementation Of UDAY?

24*7 Power for All
24*7 Power for All

Electricity is a crucial necessity in all aspects of our life. It is recognized as a basic human requirement and a critical infrastructure over which a country’s socio-economic development depends.

Uninterrupted supply of electricity at a reasonable rate is intrinsic for overall growth in agriculture, industry, commerce, services and other various sectors for exploiting the vast potential of employment creation in these sectors. A robust supply of electricity is very important for sustainable growth of these segments. Electricity is recognized as the key driver for enhanced quality life, rapid economic growth and poverty alleviation. India has witnessed an outstanding economic development in the past two decades.

The advanced & reliable infrastructure, together with abundant supply of electricity has been one of the prime reasons behind this rapid acceleration of this development. Based on the importance & contribution of electricity sector in developing other sectors, the government has kept it at the top of its priority list.

Constitutional Status & a Chronology on Legal Framework of Electricity in India

The subject-matter of electricity has been mentioned under list III of Concurrent list under seventh schedule of the Indian Constitution.

A timeline on the Legal Framework:

1910 Indian Electricity Act
1948 Electricity Supply Act
1951 Formation of CEA as part-time body
1956 Industrial Policy Resolution passed
1976

Electricity (Supply) Act, 1948 ammended

1985

Inception of Ministry of Energy

1991 Elecricity (Supply) Act, 1948 ammended
1998

Electricity Laws (Ammendment) Act

2003

The Electricity Act 2003

The 24×7 Power To All Initiative

The 24×7 power supply to all in a commitment made by the Indian Government with the objective of reviving and enhancing the country’s economic growth. This commitment was made in June 2014. Subsequently, Forum of Regulators (FOR) was constituted as a working group for developing the road map for achieving the goal for providing round-the-clock quality power supply to each and every consumer. The objectives laid down by FOR are:-

  • Ensuring that power is supplied to irrigation pumps for at least 8-10 hours each day depending upon agro climatic factors of the States
  • Acheiving reliable uninterupted power supply to industrial, commercial & deomestic consumers.
  • Providing elecricity access to every unconnected households.

Key Strategies for Accomplishing the Programme Objectives:-

Increasing Generation Capacity

By establishment of robust coal connectivity to thermal power plants.

By constitution of SPV for facilatating clearences prior to auction to mining companies.

By establishing adequate logistics for supplying coal.

By accelarating Renewable based power generation & use of energy efficient electrical appliances.

 

Strengthening of Transmission Infrastructure

By creating Green Energy Corridors

By utilizing high performing conductors in the new & existing lines

Desings of transmission system must be backed by appropraite & sufficient information on future demands.

 

Improvement & Enhancement of Distribution Network

Through upgradation of prevailing distribution network.

By Estimating future power demand through surveys.

Establishing separate feedrers for agricultural uses.

Leveraging solar energy to meet irrigation requirements.

Reforming the management scenario in DISCOMs

Enhancing financial efficacy of DiSCOMs

 

Present Scenario: The 24×7 Electricity & the UDAY

The country aims to provide 24×7 electricity supply to all households, commercial business, industry, public needs, agriculture and other electricity consuming entities by 2022 – the 75th Year of India’s Independence. However, in order to achieve this objective, the country needs to almost double the installed capacity of generating power in the country with at least 60000MW of Thermal power capacity. Presently, the country generates 3,56,100.19MW of power which includes 2,26,279.34MW of thermal power, 45,399.22MW of hydro power and 77,641.63MW of renewable power. Renewable energy includes solar, wind & biomass-based energy.

India’s peak demand for power at present stands at 1.81 lakh MW. Though the present capacity of power generation can meet up with this demand comfortably but with more reliable supply of power, it is expected that there would a 7% growth in annual power demand. Now, since the older thermal power plants have to be phased out & the plant load factor from renewable sources of energy is close to 20-25%, there is a critical need to establish high quantity of power generation capacity for meeting the surge in demand.

After implementation of Sahaj Bijli Har Ghar Yojna – the Saubhagya scheme, a total of 21.3 crore households today are electrified in the country. Under this scheme 2.5 crore homes were given electric connection in last two years.

However, providing connections does not guarantee access of electricity. Reports revealed that in more than 2/3rd of the households in the villages of Uttar Pradesh, West Bengal, Bihar, Jharkhand, Odisha and Madhya Pradesh have electricity connection but not even 40% of these households gets meaningful access to electricity. Presently, agricultural consumers from all over the country on an average enjoy 7-8 hours of power supply in a day while domestic consumers gets around 20 hours of power supply in a day. Many rural consumers are displeased with the sub-standard power supply they receive and had cited quality (such as low voltage issues), reliability, affordability and duration as key concerns.

The root cause of contradiction between universal electrification, surplus power and the inability of supplying it round the clock to each and every household is a “debt” which burdens the state-owned electricity distribution companies – DISCOMs, impairing their nationwide capability of building & maintaining power grids & equipment. Additionally, states’ inability or refusal for increasing electricity bills had also led to an increase in borrowing & power shortages which in turn have made DISCOMs to be reluctant in buying available electricity. This has ultimately resulted continuation of blackouts & erratic supply of power.

It was estimated that this debt will reach $37 billion by 2020. This led to formation of Ujjwal Discom Assurance Yojna (UDAY) to replenish loss- making DISCOMs. It is a revival package for the Indian electricity distribution companies, initiated by the government with the objective of finding a permanent solution to the financial mess that has crippled into the power distribution sector.

Under UDAY, a MoU was signed between the state governments, power ministry and DISCOMs which articulated that 75% of DISCOMs outstanding debts as on September 2015 would be taken over by the State governments through bonds.

DISCOMs were given the job of reducing power & cost of interest, administer and reduce power theft & transmission losses and fixation of faulty meters. By increasing the charges, DISCOMs were given the job of wiping out the -difference between supply cost & average revenue by 2018-2019. But inspite of the debt takeover, 15 states accounted for a total of 85% of national Aggregate Technical & Commercial (AT&C) losses, thus UDAY was a failure. But, here the question is why UDAY failed to help DISCOMs to become more profitable?

The answer lies in the success of electrification drive of India.

UDAY was launched in the year 2015, and a year after in 2016 another programme for connecting all the villages & households to the grid was launched by the Indian government for providing them uninterrupted power supply throughout the day. As both the programmes were running simultaneously, they were converging & diverging with each other on certain aspects, which developed into a haywire state of affairs for the implementation agencies.

The government provided electricity connection to 26.30 million rural households within by January 2019. This mammoth exercise created multiple problems for DISCOMs – there was a hike in the costs and reduction in revenues as most of the newly connected households were from rural areas or low income groups who were unable to pay the bills or paid partially.

This made DISCOMs reluctant in buying more power, either because of running short of fund or because of being afraid that consumers might not pay back the dues. But, whatever may be the reason behind, it ultimately led to the continuation of black outs.

Another most viable reason behind UDAY failing to bailout DISCOMs might be because of infrequent tariff hikes. Since DISCOMs were not permitted to raise tariffs, consumers owed a sum total of Rs 76,963cr at the end of FY2018-19. The incompetence of DISCOMs in recovering outstanding bills has been an enduring issue which puts the blame on the state regulators for not increasing the tariffs to recover the losses.

The DISCOM mess is also many times caused due to populist measures. For political gains, the electricity price is purposely kept low by the successive governments in the states, leaving DISCOMs in the red.

Lastly, the metering process is sub-standard which results in lower billing & collection efficiencies. As billing and collection process is inefficient, it leads to limited fund inflow for DISCOMs, thus hindering its progress.

Way Ahead

For achieving the goal of providing 24×7 electricity to all, government needs to focus on a few frontiers. First, there is a need of real-time monitoring of power supply at the end users level. We only achieve what we are able to measure. While the government is busy in installing feeders, there is hardly any provision for monitoring the supply as received and experienced by the households. It is essential to track the evolving reality of the power supplied at ground level in order to guide the DISCOMs to act efficaciously in the regions where performance level is sub-optimal. Eventually, smart meters should help enable such robust monitoring. However, installation of smart meters would take some time, therefore, in the interim, government can rely on IRVS (Interactive Voice Response System) & SMS based reporting by the consumers.

Second, DISCOMs must focus on enhancing the supply quality and maintenance services. Estimation of adequate demand & procurement of respective power will enable a huge reduction of load-shedding. It is essential that DISCOMs identify novel cost effective approaches for maintaining infrastructure in the load-shedding prone regions. Introduction of village-level coordinators, as done by Maharashtra, for addressing local level challenges is a welcome step which other states can also implement.

Thirdly, advancement in supply must be complemented with significant enhancement in customer services which includes metering, billing and collection of revenues. The success highly depends on curbing the DISCOM losses & consumer honesty. For better management of services, DISCOMs might explore a franchisee prototype by collaborating with the operators of local-grid. A potential model includes mini-grid importing grid electricity & supplementing their own generations at the hours of peak demands. This type of tail-end generation framework would ensure enhanced supply of electricity to the households and empower DISCOMs to collect its payments from a single entity.

Fourthly, cater to people’s aspirations. It would create willingness to pay for the services they received. Advanced market commitments & large-scale procurement would help in reducing the prices.

Fifthly, government must also address the issue of ensuring power stations become profitable before establishing further or reducing stranded assets & low utilisation.

Lastly, distributed generation would help in complementing centralised grid electricity for resolving DISCOM losses and would also ensure sustainable use of electricity for the entire rural economy which includes farms, schools, hospitals, and small entities. This would help in enhancing consumer satisfaction and ensure that every consumer reaps the socio-economic bonus of electricity.

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