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Ramp up infra to make Discoms viable: WB
Andhra Pradesh needs to ramp up its transmission and distribution infrastructure if it wants to revitalise the power sector and achieve ‘Power for All’, says a World Bank study released here on Monday. According to Sheoli Pargal, World Bank Economic Advisor and author of the report, the study was made before the bifurcation but it was made on the basis of performance of each Discom.
Hyderabad: Andhra Pradesh needs to ramp up its transmission and distribution infrastructure if it wants to revitalise the power sector and achieve ‘Power for All’, says a World Bank study released here on Monday. According to Sheoli Pargal, World Bank Economic Advisor and author of the report, the study was made before the bifurcation but it was made on the basis of performance of each Discom.
Sheoli says the study recommends freeing utilities and regulators from political interference, increasing accountability and enhancing competition in the sector in order to move it to a higher level of service delivery and calls for transition from administratively-run to commercially-run utilities.
The report says that the power sector in AP has been making losses since 2012-13. This despite the state being an early reformer and having initiated several initiatives like improved metering and energy auditing, it says. Mounting subsidies in the form of free power and increased political interference in the functioning of the Discoms has thrown the power utilities into deep financial crisis in both Telangana and Andhra Pradesh, according to the World Bank report.
Sheoli says that despite the state achieved lowest AT and C (Aggregate Transmission and Commercial ) losses among all other states in the country, the discrepancy in subsidy booked and subsidy received from the government have pushed the Discoms into trouble.
For instance, since 2003, subsidies booked have grown by 17 per cent per year and subsides received by 12 per cent per year only. The cumulative gap between them was Rs 450 billion for 2003-13. This has a crippling effect on the finances of the utilities. Lack of effective targeting of such subsidies has led to anomalies such as economically weaker sections were paying more for consuming less power, she adds.
The report also points to several reasons that have constrained the power sector in the state from growing including the cost of power purchase which rose sharply for distribution companies. The cost raised from Rs 2.81 per unit in 2009 -10 to Rs 3.39 per unit in 2011-12 and to Rs 4.25 per unit in 2012-13.
The World Bank official says the utilities should be strengthened commercially by paying subsidies transparently and fully on time when the governments mandate free power supply. World Bank Energy Specialist Mani Khurana said the need of the hour is to strengthen the Discoms to improve operational and financial efficiency in distribution through a multi pronged approach, including use of IT for transparent energy audit .
