The sorry state of affairs at state electricity boards (SEBs) is as closely tied to financial profligacy as it is to politics.
“The gap between average cost of supply and tariff has been on an increasing trend. While most DISCOMs have improved in ACS - ARR gap (on subsidy received basis) in FY22, the gap has further increased for few DISCOMs,” said Anish Mandal, partner, Deloitte India.
Political pressure accounts for many subsidies and supply at low tariffs, leaving the SEBs at a weakened state when it comes to paying up their dues or signing new contracts with the power generating companies.
According to the Power Finance Corporation, the total debt of the power distribution sector in the country rose to Rs 6.2 lakh crore in 2022, an increase of 24 per cent since the Covid pandemic struck. The saving grace? Debt addition has slowed down, thanks to the Centre’s pressure tactics, the states increasing electricity charges, loan takeover by state governments and improved subsidy disbursement and dues collection.
However, there is a lot more to be done. Power theft and loss during transmission is inordinately high. India loses around Rs 1.32 lakh crore in power theft every year, according to an estimate. Figures of the Central Electricity Authority from 2018 shows that more than 27 per cent of all power produced in India is lost to dissipation or theft.
The way out? “Smart meters, smart grid implementation, efficient power procurement, better infrastructure, etc.,” said Mandal. “Moreover, utilities need to embrace more technology to reduce commercial losses.”
