Date:31/05/2006 URL: http://www.thehindu.com/2006/05/31/stories/2006053106211500.htm

Business

States to be penalised for power sector lapses

Special Correspondent

Funds for capacity expansion not used by many States

NEW DELHI: The Union Power Ministry is planning to recommend a select review of the annual funds allocated to States so as to impose penalties on those which have failed to utilise the money for expansion of generation capacity in recent years.

Addressing State Power Secretaries and chiefs of power utilities at a conference here on Tuesday, Power Minister Sushilkumar Shinde noted that while the Central utilities have substantially added to the country's generation capacity, the States had lagged behind in this task.

The Ministry, he said, would take up with the Planning Commission the issue of the States failing to utilise the funds allocated to them for capacity expansion. "Many States have not added any significant capacity in the last five to ten years... The Ministry is considering recommending imposition of penalties on those States which are lagging behind,'' Mr. Shinde said.

Mr. Shinde pointed out that as the aggregate technical and commercial (AT&C) losses in some States were at a high of 70 per cent, major reforms were required in the power sector, including the unbundling of State electricity boards (SEBs) and setting up of infrastructure facilities to ensure higher generation.

Apart from the AT&C losses, the country, Mr. Shinde said, could not afford inefficient operation of power plants with their plant load factor (PLF) below 10 per cent such as in States like Bihar, especially when the Central units had a PLF of 91 per cent. It was owing to this that the country's power situation had changed tremendously for the worse since the 1990s when the shortage of electricity was restricted to a few states.

At the same time, Mr Shinde said it was encouraging that States such as Tamil Nadu, West Bengal and Punjab had shown how losses could be reduced. The Minister also reminded the State Power Secretaries that the onus of implementing the `Rajiv Gandhi Grameen Vidyutikaran Yojana,' entailing 100 per cent electrification of rural households by 2009, was on the State governments.

In his keynote address, Planning Commission Deputy Chairman Montek Singh Ahluwalia noted that the inadequacy in the power sector was the biggest single constraint on achieving a GDP (gross domestic product) growth of eight-to-nine per cent.

To overcome this hurdle, Dr Ahluwalia pointed out that the AT&C losses would have to be reduced from 40 per cent to 15 per cent by the end of the Eleventh Plan. He said that instead of trying to reduce AT&C losses and putting the transmission segment on track, too much emphasis was laid on power capacity addition.Moreover, the higher tariffs charged by the power utilities only hit the small and medium units, which created employment, while the large enterprises having captive power generation facilities remained largely unaffected.