Troubling Power sector | Burning Issues | Free PDF

ISSUE

• The power sector is stuck in a vicious cycle and hence the revival must start with restoring the financial health of the Discoms.

Problems surrounding the power sector

• The pricing of power
• Demand less power from the power generating companies(Gencos)
• In turn impact Gencos.
• Mounting dues
• Gencos cannot pay to Coal India
• Problem of potential NPAs on account of non-performing Gencos.
• Thus there is a vicious circle that has afflicted the energy sector

UDAY scheme

• It is the financial turnaround and revival package for electricity distribution companies of India (DISCOMs) initiated by the Government of India with the intent to find a permanent solution to the financial mess that the power distribution is in.
• Most of the Discoms failed to carry out mandates which includes critical activities like reduction of AT&C losses, elimination of Average Revenue Realized (ARR) & Average Cost of Supply (ACS) gap, feeder metering, price rationalisation etc.
• 13 have actually reported higher Aggregate Technical & Commercial(AT&C) losses as compared to previous year.
• The States’ Gross Fiscal Deficit to GDP Ratio got increased by 0.7%.
• No new power purchase agreements(PPAs) are being floated even though there is demand for power.

 Way Forward

• Separate feeder lines, auditing, strong action against defaulters and irrational pricing mechanisms.
• The successful models
• Coal production will need to be ramped up.
• A high-level empowered committee
• The renewable energy sector should not burden.
• Cross subsidization
• Promoting renewable energy is laudable, but this has to be borne by the society (through taxation) and not by the entities that are already in trouble.

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