Press Releases – 2009

  States should push more for power sector reforms: Bharatsinh Solanki

New Delhi, December 17, 2009

“Electricity is listed as a concurrent subject in the Indian Constitution. Unless the state governments are proactive in implementation of further reforms in the sector, it is very difficult to achieve good outcomes. Among others, open access and tariff rationalisation are the key issues in which states should take a lead following the guiding principles laid down under the Electricity Act 2003 as well as National Electricity Policy 2005,” said Bharatsinh Solanki, Union Minister of State for Power. He was speaking at the 8th Parliamentarians’ Forum on Economic Policy (PARFORE) meeting organised by CUTS International, a think tank involved in research and advocacy on various economic issues.

He further added that unbundling of utilities and unbarred open access are the keys to facilitate competition in power sector. However, few state governments such as Punjab are deferring the process of unbundling. “There is an urgent need to control high transmission and distribution losses so that financial health of utilities is restored and consumers are provided improved quality of service. The Ministry of Power has been initiating various programmes such as the Accelerated Power Development and Reform Programme (APDRP) and the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) to strengthen the distribution system and ensure power to all households in the country,” he added.

Highlighting the key challenges facing the power sector, Pradeep S. Mehta, Secretary General of CUTS International stated that because of poor policy initiatives, the country is not able to achieve capacity addition targets for the last couple of years. “During the 11th five year plan, the target was to add 78577 MW. However, we are likely to add only 62,000 MW at the national level. It shows that the gap between demand and supply of power would widen further,” he said. Quality of service to consumers is another major issue. Some states such as Rajasthan and Gujarat have achieved adequate progress through feeder renovation programme to improve the quality of service. Under this programme, the feeders having intensive agricultural as well as rural load have been separated from urban load to ensure better load management.

Sharad Joshi, MP, Raja Sabha, while deliberating on the issue of power supply to the agriculture sector, stated that the present consumption pattern in agriculture is not sustainable. “Apart from the financial burden on the utilities, the excessive use of power is resulting into serious ground water depletion. In most of the states, agricultural consumers are charged on the basis of a flat rate system. This system does not provide any incentive to farmers to make efficient use of electricity as well as ground water,” he stated.

In a presentation, highlighting the key outcomes of capacity building initiative on Regulatory Reforms in Electricity Sector in South Asia (RESA project) undertaken by CUTS International, it was mentioned that consumers at large are still not aware of electricity reform process. Most consumer complaints, especially in the rural areas, remain unattended. Though, consumer grievances redressal forums have been constituted at the corporate level of distribution utilities, independence and autonomy of these bodies is a major issue since they are effectively controlled by the utilities.

Sharing his experience on power sector reforms in Uttar Pradesh, Shailendra Kumar MP, Lok Sabha said that increasing electricity dues imposed on the consumers is another major problem in the power sector.

“Poor metering of agriculture consumers is a serious issue. Because of inadequate metering it is very difficult to estimate the number of such consumers and therefore, decide the amount of subsidy. To ensure more economic efficiency, subsidy should be given directly to farmers not to the utilities,” saidGeeta Gouri, Member, Competition Commission of India.

Several other MPs including E. M. S. Natchiappan, P. J. Kurien, P. Rajeev, M. B. Rajesh, participated in the deliberation and expressed their views on further reforms in the power sector.

For more information, please contact:
Rajesh Kumar, +91 98879 05287, rk2@cuts.org,
Udai S. Mehta, +91 98292 85926; usm@cuts.org