The power sector is in crisis, thanks to misplaced priorities and opportunism in policymaking, particularly at the state level. Two decades after tentative reforms and opening up in the sector, policy stays fixated on generation capacity, never mind huge revenue leakage in power distribution, lack of capacity in transmission and avoidable , policy-induced shortage of coal and gas.
Already, with several state power utilities financially moribund and simply lacking creditworthiness for increased offtake, multiple power producers have announced stalling of operations; entire projects are now on the back burner.
And yet, the power ministry's penchant for new generation activity remains quite undiminished . It is currently soliciting investor interest for two ultra-mega power projects, one each in Tamil Nadu and Odisha, with a combined investment requirement of about Rs 50,000 crore, which are slated to supply to several states.
But the fact remains that several of the state utilities expected to procure the power have run up huge losses and outstandings because of reckless politically-mandated tariffs, attendant giveaways and plain open theft of power, with the powers that be turning a Nelson's eye to the matter.
What is worse is that the policy establishment seems, verily, to have lost interest in arresting the mounting commercial losses in distribution. The annual Economic Survey no longer gives details of the massive forfeiture involved, although a line buried deep in the text does mention, more as an afterthought, that the yearly distribution losses amount to as much as 1% of gross national output,or about Rs 1,00,00 crore.
Itclearly makes little sense to coagulate big-ticket investments when the monies horrendously fettered away, mostly by way of power theft, are twice that. The runaway losses would surely short-circuit the entire power sector, with grave economy-wide implications. Hence the vital need for vision and proactive policy to stem distribution losses and stamp out routine theft, invest in transmission and unclog coal and gas supply.
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