BackWorld Bank says focused approach needed to tackle power distribution losses
The report pointed out that Uttar Pradesh alone accounts for 40% of the power distribution losses
Premium
Mumbai: The four states of Uttar Pradesh, Madhya Pradesh, Tamil Nadu and Jharkhand account for nearly 60% of the country’s power distribution losses, and unless a “focused" approach is adopted to tackle the problem of distribution losses, the goal of bringing power to all by 2019 is unlikely to be achieved, says a World Bank report.
The report also points out that Uttar Pradesh alone accounts for 40% of these distribution losses.
World Bank carried out the study of the power distribution sector at the request of the government of India. The report, titled More Power to India: The Challenge of Distribution, was released on Monday.
The total losses of the power distribution sector stood at ₹ 1.14 trillion in 2011 and even if tariff rises at an average of 6% till 2017, the accumulated losses will be around ₹ 1.23 trillion, the report projects.
It highlights that while the country’s power generation capacity tripled between 1991 and 2012 and the entire country is now integrated through a state-of-the-art transmission system, the distribution sector remains a weak link. While 28 million new consumers were added by the power distribution companies, 20 million people still don’t have access to electricity.
It called for more private participation in the distribution sector.
“The crux of the matter is that distribution utilities are not run on commercial lines. Despite corporatization, their boards remain state-dominated and are rarely evaluated on performance. Regulators have not pushed them sufficiently to improve performance, in part because of limited regulatory accountability and also the difficulty of regulating a state-owned entity. And a history of state rescues has meant that lenders do not pressure distributors to improve their operational and financial performance, expecting to be paid back by the state," said Sheoli Pargal, an economic adviser at the World Bank and author of the report.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
