1. Home
  2. Business
  3. With power losses of $40 bn,

With power losses of $40 bn, India needs periodic tariff hikes

IANS 30 Aug 2012, 18:45:24 IST
New Delhi, Aug 30: India's power distribution firms have accumulated losses worth a whopping $40 billion, which requires staggered hikes in tariff to ensure their sustainability, a top expert in the field said here Thursday.

"India needs graded doses of power tariff increase to ensure distribution companies do not fail," former power secretary Anil Razdan said while addressing a conference on "Ensuring India's Power Future".

According to him, such large losses arose from aggregate technical and commercial losses (AT and C) and low power tariffs. "Currently cumulative distribution losses amount to Rs.200,000 crore. Only last year's losses came to Rs.39,000-Rs.40,000 crore."

These losses, which are the sum of technical and commercial losses, and the shortage due to non-realisation of total billed amount, currently amount to 26 percent, and according to Razdan, these are urgently required to be cut to 15 percent.

Certain states have up to 50 percent power loss on account of AT and C losses, he said and suggested a specific increase of power tariff to Rs.7 per unit from the prevailing around Rs.3 per unit.

The former bureaucrat's comments come against the backdrop of a massive power outage in India end-July for hours on end, that halted tain and metro services and disrupted life across 20 states. As many as many 600 million people were affected.

Warning about a future scenario if there are no reforms, Razdan said that "no-power" was more expensive than "priced" power.

Speaking earlier, Leena Srivastava, executive director for operations, The Energy and Resources Institute (TERI), which had organised the two-day power conference, said that there was very little choice for the country other than increasing energy efficiency.

"Besides energy efficiency, the renewable energy mix in power generation will need to go up to 30-40 percent by 2030", Srivastava said.

Meanwhile, India's Attorney General G.E. Vahanvati has opined that the Central Electricity Regulatory Commission (CERC) has the authority to revise or regulate tariffs adopted, based on competitive bidding.

Many private power producers are keen to renegotiate the tariffs following the sudden hike in coal prices in major producing countries such as Australia, South Africa and Indonesia.