Stop power theft, for India’s sake–07.11.2017

It is unfortunate that continuing laxity on collecting payment for the power that is distributed threatens to upend sector reforms, and unravel an unprecedented bond issue by state governments.

Reports say that despite Ujwal Discom Assurance Yojana (Uday), the dues of state distribution utilities, or discoms, now add up to Rs 20,000 crore and counting. Under Uday, states have issued bonds to the order of Rs 2.32 lakh crore, in a bid to clean up the balance sheets of debt-ridden discoms. The idea was to start on a clean slate.

But the reported non-reform and rising outstandings of discoms to power producers put a big question mark on the viability of Uday. Rampant power theft is to blame.

Sure, there could be technical reasons for energy loss of up to 30% of what is generated: the lack of requisite investments in distribution such as the absence of up-to-date transformer capacity is also a cause.

But the real culprit is sheer political patronage of outright theft of power. It is gross. The powers that be must purposefully clamp down on power theft and non-payment. There may be a case for subventions, but these need to be transparently budgeted and provided.

Open-ended subsidies in power make no sense. They can stultify investments and verily short-circuit the system. Without a healthy power sector, growth will stall.

We need transparency in the very process of reform of discoms.

We need to mandate quarterly publication of accounts of discoms, if not monthly. What is required is responsible politics to proactively improve realisations of discoms and purposefully stem revenue losses.

The political executive must drive home the message that without power sector reforms and sound collection of user charges, we cannot have investments and fast-paced growth going forward.

This piece appeared as an editorial opinion in the print edition of The Economic Times.
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via Stop power theft, for India’s sake

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