New Delhi: Facing criticism over India continuing to lose a whopping 40% of the power it currently generates, the power ministry is seeking a 150% increase in central funding over the next five years to try and address the problem.
A government decision approving the requested hike in funds is expected to be part of this year’s Union budget, say ministry officials.
While there are normal “losses” during transmission, much of India’s power wastages stem from theft and unauthorised use. The ministry has had a target of bringing down such losses to 15% by the end of 2012.
That target is considered very ambitious as, typically, anything under 20% is considered as an acceptable loss in many developed economies, according to power industry experts.
But the power ministry’s performance on the existing plan has come under severe criticism by India’s apex planning body, the planning commission, which is very concerned that the losses are stubbornly close to 40%.
The commission now wants various states to bring down the losses to 15% by the end of the next plan, or 2012. Power shortages remain a major concern for India both in terms of supplying households in peak winter and summer months, as well as a key for economic expansion.
The programme, dubbed Accelerated Power Development Reforms Programme (APDRP), was started in 2000-01 to restore the commercial viability of the power distribution sector.
It was created for upgrading the distribution system, minimising transmission and distribution losses, improving metering and assigning responsibility for realisation of user charges. The additional funds being sought will run through 2012. The programme was allocated Rs40,000 crore in 2002 for the past five years.
“We will be asking for an allocation of Rs1,00,000 crore (and) are preparing a cabinet note seeking the extension of APDRP, and the outlay includes the incentives to be given to the states,” said a senior power ministry official who did not want to be quoted.
The request for additional funding also stems from the planning commission’s advice to the ministry to boost the fund allocation in order to bring in faster results.
But even out of the previous allocation of Rs40,000 crore, only Rs12,000 crore has been utilized and this includes Rs1,575 crore as incentives, which were released to the states who were able to bring down the losses.
The incentive plan is quite generous. If the states are able to reduce their losses by Re1, they automatically receive 50% of that as an incentive, said the power ministry official. Projects totalling nearly half of the previous allocation, or Rs 20,000 crore, have also been approvedA committee appointed by the government, and headed by former power secretary P. Abraham, had recommended in 2006 that the scheme should continue in the 11th plan.
It also recommended that the government should directly release the funds to power utilities instead of routing allocations through state governments, citing delays in cutting down power losses.