Thaindian News

New Delhi, Oct 30 (IANS) To ensure uninterrupted power supply, reforms like implementation of “open access”, allowing consumers to procure power directly from power generators, should be introduced, an industry lobby said Sunday.

According to the Confederation of Indian Industry (CII), “open access” will also enable consumers to buy power from a State Electricity Board (SEB) providing cheaper power.

This would also promote competition amongst SEBs, a CII statement said.

It also recommended placing electricity under the purview of the proposed Goods and Services Tax (GST).

High power distribution losses are adversely impacting gross domestic product (GDP) growth, the statement said.

“Even as the government continues to be on overdrive to increase power generation capacity, the dismal financial situation of the distribution sector (the cash generating segment of the power value chain) is threatening the viability of the country’s power sector,” said CII in a statement.

“The losses of State Electricity Boards at over a whopping Rs.1,00,000 crore as of 2009-10 account for a large proportion of the fiscal deficit and the subsidies budget of the state governments and are thus increasing the burden on state finances,” it added.

According to CII Director General Chandrajit Banerjee, the financial loss has been estimated at 1.5 percent of the national GDP. This will act as a major deterrent to private as well as global investments in the sector.

CII made suggestions like improving the condition of distribution companies (Discoms) by increasing competition for reforming the distribution sector.

“This can be done through adoption of distribution franchisee route, increasing private competition or public private partnership models. The appropriate model can be adopted by the discoms on a case to case basis,” the statement added.

Timely issuance of cost reflective tariffs, including introduction of time of day tariffs, also needs to be introduced.

The industry lobby stressed that the key issue that the SEBs are battling are cost-tariff mismatches.

While there have been no substantial tariff revisions in the past five or six years (states like Tamil Nadu raised tariffs after a gap of seven years), the power procurement costs have risen sharply.