Inadequate implementation of reforms laid down by the Amendment to the Electricity Act, 2003 led to the stress in the power distribution system according to Minister of State (Independent Charge) for Power and New and Renewable Energy, R K Singh.
Speaking at FICCI’s 93rd Annual General Meeting, he said that the inadequate implementation of the amendments to the Electricity Act, 2003 are the reason for the problems of today. “The finances of the power system were separated from the finances of the state. Now what happens is that the decision making continues to be taken by the state, but the consequent losses of subsidy not paid, theft not stopped or billing efficiency not improved, falls on the Discoms. The states fiscal position does not deteriorate, and that is the harmful impact of the part reform which was carried out. If we were separating distribution systems, we should have done it entirely, and we should have de-licensed as we have done for the generation business,” Singh said.
“This leads to state-owned Discoms not being able to pay for power; this causes stress upstream and dampens investment. Because they are making losses, they cannot buy power, so they will resort to load shedding, this has been happening for the past decades. Every five years or so, the central government injects money to strengthen the distribution system. That is not maintained,” he added.
According to Singh, the losses are incurred due to inadequate metering and masked subsidies offered by state governments that are not paid for.
Making a pitch more delicensing of the Discom business and more privatisation, Singh said, “A large number of power distribution companies (DISCOMs) are loss-making, now that is what is a major factor for worry. All of these losses making DISCOMs are owned by state governments. None of the private Discoms are loss-making. The AT&C losses of all the private Discoms are less than 30 per cent, and they are all making a profit. The state-owned Discoms are making losses.”