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Home News Power Sector News New Power Sector Policies - From Crisis to Disaster - Page 9

New Power Sector Policies - From Crisis to Disaster - Page 9

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If we had indeed added 57,775 MW in the 9th Plan , we would now be surplus by about 30,000 MW and 150 billion units. The average cost of power would then have increase by 40-50% due to this addition of costlier power to the pool. The other distortion in the power pool is that while our shortages are currently of peaking power, our focus still remains base load plants. It is creating base load capacity with expensive liquid fuel that has compounded the current problem. If we had also added 28,244 MW of private power as base load stations, we would have distorted the economics of the power pool even further. Not meeting 9th plan target was therefore a blessing in disguise.

The second issue that needs to be addressed is the pricing of electricity. Currently, industry and commercial establishments pay higher rates than the actual cost of power, while the domestic and agricultural consumers pay a lower rate. We believe that there has to be an element of cross-subsidy in a country where a large number of people have very low incomes. One of the distortions that we have introduced currently is to allow the industrial consumers set up a large amount of captive capacity and move away from the grid . We need to either force the industry to take at least 50% of its electricity from the grid or introduce an electricity surcharge that is used to cross-subsidise the low-end consumers.

For the domestic consumer, there is a need to introduce a slab-wise tariff that cross subsidies the low-end user and generates a surplus from the elite consumers. The recent increase in elite consumption- air conditioners, geysers and heaters have to be charged suitably for providing much needed resources for the power sector.

The agricultural sector is being wrongly blamed for large subsidies. According to the Government, in 1997- 98, 30.75% of the total power supplied or 91.25 Billion units were supplied to agriculture. This is against a connected load in agriculture of 46,486 MW". If we convert the connected load to the no . of hours that each pump set must work in order to consume 91.25 billion units, this gives a figure of 1,963 KWhr/ KW. This works out to nearly 6 hours of power every day of the year for each agricultural consumer as against a figure of 1,667 KWhr/KW only for industry. These are patently false figures and willful manipulations to hide actual technical and commercial losses. Agricultural consumption of 200 days and 6 hours will give us 1200 KWhr for every kW of connected load. With this correction, the agricultural consumption is not 30. 75% of the total as claimed by the government, but about 18%. Thus the subsidy being provided, is not of the order of Rs. 15,000 crore as claimed but about Rs. 8,000 crore.

However, un metered supply introduces distortions as it allows pilferage and does not promote efficiency. Due to un metered supplies, a large part of the existing Transmission and Distribution (T&D) losses and pilferage are put to the agricultural account. As the revenue from agricultural sector does not depend on the amount of electricity supplied to it, agricultural section and all rural areas are starved of electricity. Thus, it is in the interest of the agricultural section and the rural economy that the rates for agricultural are kept but low but the supply is metered . If populist measures such as free electricity are introduced, they can only be fulfilled by sporadic and poor quality supply. However, rate of electricity to agriculture needs to be pegged lower than the average rate of electricity as agricultural is given off-peak power, generating much needed base demand on the system. It also requires cross-subsidies as all advance countries are providing huge subsidies to their agriculture.

Along with the above measures we need to plug the current losses in the system - the T&D losses. With the correction for agricultural consumption, the Transmission and Distribution losses increase from24.79% as claimed but to about 36%. The technical losses in the India system are high as we have long LT lines for the distribution of power. We have spent much less on the T&D system leading to higher transmission and distribution losses. The other aspect of the current policies has been the sharp increase in pilferage of electricity. In Delhi, for example, the T&D losses were of the order of 22-23% till 1992-93. Currently they stand at about 48%12 even though Delhi has no agricultural load and a compact area. Under the liberalisation



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