Poor supply holding up economic growth

Poor supply holding up economic growth
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First Published: Wed, Feb 28 2007. 01 22 AM IST
Updated: Wed, Feb 28 2007. 01 22 AM IST
New Delhi:  Shortages in power supply will not improve in the near future, unless signficant measures are undertaken to produce investment and reduce losses due to theft, says the Economic Survey, 2006-07.
Significantly, power shortages have been identified as one of the key infrastructure bottlnecks threatening the country’s ability to sustain the 9% growth per annum, recorded in the last two years.
As an immediate palliative, the Survey posits containing the growing aggregate technical and commercial losses, which currently hover around 40% to 15%.
The government’s flagship power reforms programme in the country—the Accelerated Power Development Reforms Programme (APDRP)—initiated to take care of aggregate technical and commercial (AT&C) losses has grossly underperformed due to theft and unauthorized use.
APDRP was started in 2000-01 to restore the commercial viability of the power distribution sector and had aimed to bring down the losses to 15% by the end of 2007, a task in which it failed.
Electricity generation during April-December (2006-07) was 7.5% as compared to 4.8%during the correspondingperiod in 2005-06. However, apart from thermal powergeneration, there was slow growth in hydel and nuclear generation.
The Survey also reports that coal production has decelerated from a high of 6.2% during April-December (2005-06) as compared to 4.5% during the corresponding period in 2006-07. Production by refineries increased from 0.5% during April-December (2005-06) to 12.6% during the corresponding period in 2006-07.
Commenting on the performance, Kirit Parikh, member, Planning Commisison said, “though a lot of energy sectors have shown improvement over the last year, we still have a long way to go in order to achieve the targets set out for the Eleventh Plan (2007-12).”
At present, India has a power generation installed capacity of 1,27,673MW. Of the added 41,110MW power generation capacity that was envisaged at the start of the 10th Plan period, only 23,250MW is expected to be added by the end of this financial year, resulting from a raft of problems ranging from shortage of power equipment to delays in projects.
“We are, however, expecting a lot of power generation capacity to be added in 2007-08,” Parikh added.
A positive indication is that the subsidy dole-out for power sector consumers as user tariffs are being brought in line with the cost of production. From Rs40,131 crore in 2006-07, it is expected to come down 1.48% to Rs39,542 crore in 2007-08.
The Survey has stressed the need for better supply of fuel for gas-based power generation projects, which are producing only about 60% of their capacity because of a shortage of gas. The losses due to gas supply shortages was 18.43 billion units. The power sector needed 53.54 million standard cubic metres of gas per day (mmscmd), while it received 34.28 mmscmd. The survey has also pointed out that the higher prices of liquid fuels including naphtha and diesel have resulted in higher power generation losses.
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First Published: Wed, Feb 28 2007. 01 22 AM IST
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