At any given minute in India, you can find out how much electricity is for sale and at what price, with a few swipes across a smartphone screen – a level of transparency in the nation’s power-sector that is increasing the odds of far-reaching change to end blackouts.
The unprecedented instant access, which shows untapped power supplies and comparatively cheaper, available electricity, (while millions go without reliable supplies) highlights deep flaws in the state-level distribution system.
The picture painted by the data is increasing pressure on local officials to embrace Prime Minister Narendra Modi’s plan to fix the woes of indebted state retailers such that all of India’s 1.3 billion people have access to electricity by 2019.
There is no escape route for states any more. And that’s a good thing because it forces the distribution companies to become more efficient.SK Agarwal, Member, Uttar Pradesh Electricity Regulatory Commission.
Required to sell power below cost for years, India’s cash-strapped power distributors stacked up unpaid loans of almost 5 trillion rupees ($74 billion) as of September 2015. The losses have eroded their ability to purchase enough power to meet the demands of customers and invest in infrastructure to support newer connections and increase efficiency.
For a story on how India is recasting electricity retailer debt, click here.
Transforming those distributors, operated by India’s states, to run more efficiently and ensure they have funds to purchase greater supplies is the key to Modi’s promise of lighting up the $2 trillion economy. 18 of India’s 29 states, and one of its Union Territories have agreed to join Modi’s debt plan for the state power distributors, according to a tally prepared by the Central government as of 20 May 2016.
India failed to achieve a sustainable turnaround of the state utilities through at least two previous reform plans, which focused on financial bailouts while doing little to push the states or their utilities to improve efficiency.
Proponents of Modi’s plan say Vidyut Pravah, the smartphone app that updates every 15 minutes with information on regional power availability, shortages and prices, holds distributors accountable and improves the odds that they will be able to see through from their side of the restructuring bargain.
“There is tremendous pressure on us to perform, to be able to meet the targets set by the Central government,” said DK Sharma, a Director at Ajmer Vidyut Vitran Nigam Ltd., a power distributor in the northern state of Rajasthan, which is ruled by Modi’s Bharatiya Janata Party.
We’re trying to ensure that every unit of electricity we supply is metered.DK Sharma, Director, Ajmer Vidyut Vitran Nigam Ltd.
Three of Rajasthan’s power-distribution companies had a combined debt of 850 billion rupees as of last year, the most among all states in India. Under the debt recast plan, the local government has taken over 600 billion rupees of loan, leaving distributors with debts of 250 billion rupees.
The Central government’s efforts to take India towards self-sufficiency in power are trickling down to the states. States realise if they don’t do their bit, they would be left behind.Chandrajit Banerjee, Director General, Confederation of Indian Industry, New Delhi
The Central government’s debt recast plan has increased demand for electricity from the distribution companies, according to Gurdeep Singh, Chairman of state-run generator NTPC Ltd., the country’s biggest power producer.
Buying More
Some of the distribution companies who were finding it difficult to buy power are now buying more. The plan has reduced the cost of funding, giving the elbow room to absorb more power.Gurdeep Singh, Chairman, NTPC Ltd.
The electricity deficit in Uttar Pradesh has nearly halved over the past year to 6.4 percent in April, even as demand rose. The state has taken on 400 billion rupees of debt held by distribution utilities, leading to monthly savings of 4 billion rupees on interest payments and spurring higher power purchases and distribution.
Modi’s administration has linked 8,095 villages to power transmission lines as of Monday, and seeks to bring reliable supplies to about 9,900 more, according to Grameen Vidyutikaran, a separate app set up by his government. After promising 24x7 electricity and economic development to win a record political mandate in 2014, failure could damage his party’s performance in the next elections.
“We want to put everything out in the open for the people to see,” Power Minister Piyush Goyal said at a press briefing last month.
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