The Hindu Business Line : Survey paints grim picture of power situation

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New Delhi Feb. 27 The Economic Survey painted a grim picture of the scenario in the power sector, with only around half the targeted addition in generation capacity during the 10th Plan expected to come up, while the total losses of state utilities rose to over Rs 26,000 crore in 2006-07.

High prices of liquid fuels, along with a serious shortage of gas, has hit generation from a large number of power stations across the country, the Survey said.

The 10th Plan capacity addition would fall short by 43 per cent at 23,250 MW against the targeted 41,110 MW, it said.

The Survey noted that during the current fiscal, gross subsidies increased by over 10 per cent to Rs 40,131 crore while the rate of return of utilities deteriorated to a negative 27.4 per cent, from a negative 24.8 per cent in 2005-06.

The financial condition of State Electricity Boards and utilities also took a beating, with total commercial losses rising to Rs 26,150 crore in 2006-07, from Rs 21,110 crore last year.

The Survey is, however, optimistic of the losses declining to Rs 21,391 crore next year.

Stressing on the need to carry forward distribution reforms, the Survey said: "Unless effective steps are taken to slash transmission and distribution losses from 40 per cent to 15 per cent, the electricity situation will not improve."

It also said that shortfall of gas supply to power stations was hampering power generation in a big way.

Of the gas-based capacity of 13,582 MW, power plants generating 10,999 MW are suffering from fuel crunch.

Higher prices of liquid fuels including naphtha and diesel have also resulted in generation losses at hybrid power plants, the Survey said.

During the April-October period, generation loss due to gas supply shortages was estimated at 18.43 billion units.

According to the Survey's provisional estimates, the power sector is expected to import 7.4 million tonnes of coal in the current fiscal.

It said that formation of a strong national grid has been recognised as a "flagship endeavour."

The existing inter-regional transmission capacity of 11,450 MW is expected to increase to 15,750 MW by the end of the 10th Plan and to 37,150 MW by the end of the 11th Plan.

On tariffs, it said that the overall weighted rate of electricity tariff has gone up by a cumulative 13.4 per cent between January 25, 2006 and January 20, 2007.

"The differential increases among the various categories reveal a healthy trend of reduction in cross-subsidies."

On the proposed hydel policy, it said that States would be required to follow a transparent process for selection of project developers.

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