New Delhi: State-owned NTPC Ltd plans to set up distribution networks near its power plants and later transfer them to state electricity boards (SEBs), a company official said.
This is aimed at resolving conflicts India’s largest electricity utility has had with state governments over land, water and environmental issues.
“We have certain responsibilities towards the states where we have our projects. Once we develop the infrastructure, we will transfer it to state electricity boards. We will start this at our Kahalgaon project and then will replicate it elsewhere,” the official said, requesting anonymity.
Kahalgaon in Bhagalpur district of Bihar was the site of citizen protests over seriously inadequate power supply that led to three people dying in police firing in January last year near the 1,840MW NTPC plant. “We have asked the government of India to allocate us a certain amount of power from the state’s quota or even increase their share, which will then be distributed through this infrastructure. This will certainly strengthen our relationship with the states,” the official added.
“The government has already identified NTPC Ltd’s power project at Kahalgaon in Bihar as a test project where the public sector unit will distribute power to residents within a 10-15km radius,” Jairman Ramesh, former minister of state for power and commerce, had earlier told Mint.
Commenting on the state of Bihar’s power sector, where the first such project will be rolled out, a power ministry official, who didn’t want to be identified, said: “Bihar State Electricity Board is starved of funds and has loss levels of 60%. It immediately requires Rs3,000 crore for setting up transformers.”
Bihar energy department officials couldn’t be contacted despite repeated attempts.
Most SEBs make substantial losses and are unable to replace their ageing power distribution networks as they cannot raise money.
SEBs in Andhra Pradesh, Gujarat, Karnataka, Rajasthan, Haryana, Punjab and Maharashtra depend on subsidies, which in some instances, are as high as 25% of the annual power revenue accruing to a state. This dependence on subsidies and the political fiat of providing free power to farmers wreaks havoc with the financials of most SEBs.
“This is an interesting model that NTPC is evaluating...without disturbing the incumbent players and their interests,” said Gokul Chaudhri, partner at BMR Advisors, an advisory and consulting firm.