New Delhi: 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’s increasing the odds of far-reaching change to end blackouts.
The unprecedented instant access, which shows untapped power supplies and comparatively cheap 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 so all of India’s 1.3 billion people have access to electricity by 2019.
“There is no escape route for states any more,” said S.K. Agarwal, a member of Uttar Pradesh electricity regulatory commission. “And that’s a good thing because it forces the distribution companies to become more efficient.”
Required to sell power below cost for years, India’s cash-strapped power distributors stacked up unpaid loans of almost $74 billion as of September. The losses have eroded their ability to purchase enough power to meet demands of customers and invest in infrastructure to support new connections and increase efficiency.
Transforming those distributors, operated by India’s states, to run more efficiently and ensure they have funds to purchase greater supplies is key to Modi’s promise of lighting up the $2 trillion economy. Eighteen of India’s 29 states, and one of its union territories, has agreed to join Modi’s debt plan for the state power distributors, according to a tally by the central government as of 20 May.
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 regional power availability, shortages and prices, holds distributors accountable and improves the odds they’ll see through 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 D.K. 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 (BJP). “We’re trying to ensure that every unit of electricity we supply is metered.”
Rajasthan’s three distribution companies had a combined Rs.85,000 crore of debt as of last year, the most among all states in India. Under the debt recast plan, the local government has taken over Rs.60,000 crore of loans, leaving distributors with debt of Rs.25,000 crore, according to Sharma.
“The central government’s efforts to take India towards self-sufficiency in power are trickling down to the states,” said Chandrajit Banerjee, director general at New Delhi-based Confederation of Indian Industry, a lobby group. “States realize if they don’t do their bit, they would be left behind.”
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.
“Some of the distribution companies who were finding it difficult to buy power are now buying more,” Singh told reporters in New Delhi on Monday. “The plan has reduced the cost of funding, giving the elbow room to absorb more power.”
The electricity deficit in Uttar Pradesh has nearly halved over the past year to 6.4% in April, even as demand rose. The state has taken on Rs.40,000 crore of debt held by distribution utilities, leading to monthly savings of Rs.400 crore on interest payments and spurring higher power purchases and distribution, according to the regulatory commission’s Agarwal.
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 chances 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. Bloomberg