'Blame High Power Tariffs, Poor Plant Efficiency For Present Crisis'

The Indian thermal power sector is passing through a critical juncture. Be it the growing popularity of energy exchanges among discoms, or the noise over open access, or the falling rates of solar and renewables, the domestic coal-fired power plants have seldom faced such pressure to prove their longterm utility and relevance. While everybody is pointing a finger at the bleeding discoms for the falling PLF, Asok Dasgupta, President, Independent Power Producers Association of India (IPPAI), tells Arindam Bandyopadhyay that the plant efficiency also needs to be improved to tide over the present crisis. Excerpts:

- Arindam Bandyopadhyay

It is almost two years now since the government rolled out UDAY scheme to bail out the bleeding discoms. What has been the impact of the scheme on the discoms’ performance, in general, and the electricity sector, as a whole?

 

The Ujwal DISCOM Assurance Yojana (UDAY) is a good scheme, aimed at reviving the ailing discoms. It was a much needed move by the government which, I believe, will definitely deliver goods.

The fact of that, in the Indian power sector, there are various externalities, including political pressures to keep the tariffs low. Almost all political parties’ manifestos have one common agenda, ie, cheap power. But the generators and discoms have to recover costs, which include fixed costs, raw material costs or fuel costs, and transmission and distribution costs. The state electricity boards (SEBs) have to sign agreements with the generators to buy power at a certain cost. If they default on payment, the generators would stop supplying power.

The public sector bears the brunt of these externalities. In thermal power segment, the public sector has a share of 60 percent, while the private sector has a share of 40 percent of the installed capacity. The private companies engaged in generation and distribution cannot afford to lose revenue by selling cheaper power to rural areas as they have to safeguard the interest of the shareholders.

UDAY was meant to revive the health of the public sector discoms. Yes, I think, there has been definite gains after the introduction of the scheme 2 years back. Not only financially, the discoms have shown signs of improvement in operations as well. I can cite the example of WBSEDCL, which has started many innovative things like pre-paid metering, smart meter, online recharging system, etc. Although these are not part of their commitments under UDAY, such innovations have helped them improve their image and efficiency levels.