Discom economics behind the dismal summer ahead

The central government’s carrot and stick policy is working for now. But the sector's problems are far from over

- Sumant Banerji

Spring flowers are in full bloom but for those living in north India, it already feels like summer. And if we are to go by the predictions of private weather forecaster Skymet, the months of April, May and June will be "searing"; the mercury could shoot up to "record levels".

Spare a thought for several towns and cities where people may not be able to switch on their air conditioners all the time. Bhuj, Morbi and Anjar, along with other towns in Gujarat, for instance, are already encountering long hours of power cuts. The reason: state run power distribution companies, or discoms, have cut off the power supply since municipalities are yet to pay their dues.

This is unusual if not unprecedented in a country where supply or the cost of electricity is a political hot potato that can make or break electoral fortunes.

"Cutting supply is always the last option. We have given many reminders and enough time for the municipalities to pay up," said an official with one of the discom companies who didn't want to be identified. Gujarat has four state-owned discom companies.

This may seem like an obvious thing to do in a business transaction but when it comes to the power sector in India, it is anything but that. Exercising this last option is the result of a domino effect from a policy change effected more than six months ago.

Before one can switch on the air conditioner, the television, or the geyser, the electricity passes through a web of wires across many entities. Electricity is generated at a power plant run by a power generation company, or genco, such as NTPC Ltd, where the primary fuel could be coal, water, wind, solar or nuclear. The job of transporting this electricity to our homes falls on the Power Grid Corporation of India Ltd (to facilitate inter-state movement of power) and the discoms. They lay a mesh of high-tension overhead wiresthe ones you see on large farms, transformers and substations.