Theft and pilferage continue to cause a loss of around 40% of electricity generated in the country, thanks to inefficient state distribution networks. So, the Union government is shifting gears—it is cutting the carrot and adding a stick to its barely used, five-year-old scheme for funding distribution reforms, APDRP. States can now no longer get grants (read largesse) to stop thefts, but will have to borrow so their utilities can invest in metering and energy audits et al.
Now, since the market won’t lend to the insolvent power utilities, a special fund seems to be in the pipeline to facilitate loans at soft rates. But this implies an embedded subsidy in the process. And there’s no magic wand here. Who else but the government will bear the funding risk? Worth doing, only if it can make sure states will clean up their act. For, the loss is something no system in the world can absorb, as the Union power secretary said on Thursday.