Government Mulls Structural Reforms In Power Sector24 November 2011
Srinagar: With the state’s Power Development Department (PDD) showing dismal performance in cutting down Transmission and Distribution (T&D) losses government has now decided to restructure the energy sector in the state. It has engaged a multinational company to provide blueprint for setting up of two separate bodies on lines of the State Power Development Corporation (SPDC). The move is being seen by experts as a step towards privatisation of the power distribution in the state. Officials said government has roped in PricewaterhouseCoopers - a global consulting firm - for setting up of Transmission and Distribution Corporations in the state to tide over the T&D losses in the power sector. “It has been necessitated in view of mounting T&D losses which are putting huge strain on state exchequer,” said a top official in PDD. The Planning Commission had strongly recommended to the state government to take steps on these lines, the official said. “The objective is to vertically unbundle JKPDD into separate transmission and distribution entities to have greater focus on the electricity distribution system. The restructuring will allow for independent functioning of transmission and distribution businesses and provide operational, managerial and functional autonomy to successor entities to operate on commercial lines,” PDD has submitted before the State Electricity Regulatory Commission (SERC) in its memo on the issue. Setting up of the Corporations for which PDC would act as a nodal agency, is a part of series of reforms government intends to take in the power sector where it has been under pressure to perform in view of growing deficit. Despite receiving grants from the Government of India for bringing down the T&D losses, state government has failed to show any laudable improvement. The statistics show that the T&D losses were highest, 65.78 percent, for 2009-10 and the AC&T (Aggregate Commercial and Technical) losses, which result in wide gap between the projected revenue realization and the actual revenue realized, had gone up to 72 percent for the same period. The T&D losses were 67.50 percent in 2006-07, 61.90 percent in 2007-08, 61.31 percent in 2008-09, 65.78 percent in 2009-10 and 60.99 percent for the last fiscal. State government has time and again found itself in an awkward position before the Planning Commission over its failure to improve performance on the T&D front. State government has even failed to meet the guidelines set by Union Power Ministry to bring down the losses by three percent annually. It has proposed to bring down the losses by around one percent to 59.72% during this fiscal. Officials said a loss of 10 to 15% of energy during import from outside is a normal phenomenon. However due to worn-out and poor Transmission and Distribution network in the state which has not been revamped for many years now, the intra-state energy losses are surging. This is also resulting in increase in import of more energy and hence piling up of the electricity purchase bill, officials said. The deficit on power purchase is likely to touch Rs 1,800 crore this fiscal as the power purchase bill has been fixed at Rs 2944 crore for 2011-12 against the expected revenue of Rs 1,136 crore on power tariffs. Officials said while the losses at national level against the energy pumped into the system is around 28 percent only JK gets returns of only 30 percent out of total energy distributed. About the new initiative officials said the two bodies will be the government companies to begin with and they will be tasked with curtailing the losses during initial phase ahead of concentrating on reforms in the sector.