Lucknow, May 18 UNI | 2 months ago

All India Power Engineers Federation (AIPEF) has pointed out the challenges before power sector for the new Central government and has assured Narendra Modi of full support in achieving the goal of 'Power To All At Affordable Rates'.


AIPEF Chairman in a letter to Mr Modi here today said over dependence on private sector for the reforms in power sector is not good for the country and there is a urgent need for a balanced approach. "The financial health of power sector has deteriorated and the government was now subsidizing even private DISCOMS",he said.

He said after more than two decades of power sector reforms in the country, it had failed to ensure adequate supply of electricity in the country, to bring down AT and C losses, make the power sector vibrant, viable and profitable, bring in the benefits of competition in power generation and distribution by way of reduced tariff and better consumer services.

"The very purpose of Electricity Act, 2003, was to reduce the losses in power sector, improve the financial health of the sector and reduce the subsidy burden of government. But due to faulty execution of policies, the contrary had happened. The financial health of power sector has further deteriorated and the government was now even subsidizing private DISCOMS. What is more serious is that due to continued wrong energy policies banking sector may collapse under the burden of non-performing assets being generated by power sector," Mr Dubey said in his letter, which was also released to the media.

He said the Electricity Act 2003 envisaged that with the setting up of independent regulators and distancing of government from tariff matters, the state distribution utilities would be able to achieve financial viability and there by restore the financial health of the power sector. "While state Discoms resorted to loans from the banks and financial institutions to meet operational deficits, it had now resulted in a position of debt trap for many of the state power utilities,"he said.

Mr Dubey said while financial restructuring plan (FRP) is being imposed on states which is forcing the states for introducing privatisation for the reduction of AT and C losses through introduction of input based distribution franchise, the government has overlooked the cases of state sector Discoms of Andhra, Tamil Nadu, Karnataka and Punjab where the AT and C losses were reduced under public sector ownership. The government had also overlooked the poor performance of private sector Discoms where the technical losses remain high and the financial health had not improved.

He further said review of UMPP policy is urgently required as Ultra Mega Power Projects were established with the aim to provide cheaper electricity as UMPP are situated at coal pit heads but the basic aim has failed as private generators are getting success in getting Tariffs revised after bidding process which is unfair.

"Similarly country has enough coal but due to wrong policies there is artificial coal shortage and coal is being imported making costly power. Coal allocation policy also needs urgent review," he added.

(Posted on 18-05-2014)