In the tribal village of Nandurbar in Maharashtra, many people, especially youngsters, can be spotted flashing a cellphone. They use the phones while in nearby Gujarat for work. But back at home, it’s not easy using the handsets as most households do not have electricity.

It’s not that the village isn’t connected to power lines, but electricity doesn’t reach many of the homes there.

A huge shortfall in electricity generation is crimping India’s economic growth. The country has a power generation capacity of 167,000MW and aims to add 62,374MW of capacity by the end of fiscal 2012.

A big worry, though, is the loss of electricity due to unmetered supply or theft during transmission and distribution, estimated at 30-50%.

A 2008 report by a team led by Nandan Nilekani, then a co-chairman of Infosys Technologies Ltd, said technology could be the key to solving India’s electricity woes. Nilekani now heads the unique identity programme, or Aadhaar.

Photograph: Ramesh Pathania/Mint

The report, titled Technology: Enabling the Transformation of Power Distribution in India, said effective adoption of technology would require a transformation of utility companies, involving technology providers, vendors, consumers and the government.

Small wonder then that the Restructured Accelerated Power Development and Reforms Programme (R-APDRP) is the largest technology project under the 11th Five-year Plan (2007-12). The power automation project is expected to spend at least 50,000 crore, of which 10,000 crore would be on technology.

R-APDRP is a reformed version of APDRP, launched in 2002-2003. That programme could not reduce aggregate technical and commercial (AT&C) losses as it had no way to compute actual losses.

The power sector has three legs—generation, transmission and distribution. Shubhranshu Patnaik, executive director at consultancy firm Deloitte India, said many utilities have largely automated generation by implementing enterprise resource planning (ERP) systems, but the transmission and distribution aspects need better handling.

R-APDRP is expected to improve the situation as it is designed to put in place a mechanism that works on computing the baseline data, or the AT&C losses. Moreover, while half of the funding by the Union government will be in the form of grants, the balance will be given as loans to utilities and is linked to actual reduction in losses by states.

The scheme will be implemented in two parts. The first will include projects for establishing baseline data and technology applications for energy accounting or auditing and consumer service centres. The second, which will begin after the first part is completed, includes regular distribution-strengthening projects.

Audit firm KPMG, the consultant to the government on the project, is drawing the road map for its implementation. Naveen Agrawal, executive director of KPMG, said apart from developing a model at the central level that can be replicated by states, his firm will help the governments identify firms that can help upgrade technology on a large scale.

India’s biggest technology firms—Tata Consultancy Services Ltd, Infosys and Wipro Ltd—are on the empanelled list of vendors for the project and are betting big on it to shore up their local revenues.

Apart from R-APDRP, there are several projects that are currently in the conceptualization or implementation stage. Smart grids, which have to be implemented by the utilities,is one such project that’s expected to revolutionize the sector.

Patnaik said the smart grid project, now in an initial design stage, will bring transmission of electricity in line with requirements through integration and IT layering via intelligent software. India has established a Smart Grid Forum and a Smart Grid Task Force to develop a framework and a national policy.