Monday, August 13, 2012

Why India's power sector is a mess in a graph

The graphic below provides the best evidence that India's power sector is a national disgrace.

The most shameful thing is that despite two high profile national programs (the APDRP and R-APDRP), the aggregate technical and commercial (AT&C) loss percentage today is higher than at the beginning of the nineties. As I have blogged here, this has little to do with inadequate investments in infrastructure and other technical issues.

Transmission and distribution losses are a combination of technical losses and commercial losses. The former, consisting of line and transformer losses, is rarely more than 6-8%. It therefore means that the major contributor to AT&C loss is commercial in nature - theft and other unaccounted for supply like agriculture. Addressing this problem is simply a governance challenge. Unfortunately, Indian state does a very bad job of addressing them.

Interestingly, it is not just the government owned utilities, but the private utilities too suffer from the same governance problems. This is reflected in their respective AT&C losses - 19.89% for BSES Yamuna, 16.85% for BSES Rajadhani, and 12.39% for NDPL - for 2010-11. And all these figures are in the National Capital Territory area, with predominant non-agriculture services, after a decade of privatization. Further, it is all the more surprising since these utilities have spent massive amounts on technical loss reduction measures. These figures are comparable or even higher than that of the much larger distribution utilities in states like Andhra Pradesh and Karnataka.

As the disaggregated (division-wise) figures of BSES Yamuna shows, there are a number of persistent high loss divisions, most of them clearly being due to failure to control theft and other commercial losses. Clearly, apart from the formidable challenge of agriculture, controlling pilferage by way of outright theft, tampering of meters, and so on are not easily addressed.

Such micro-governance challenges can be tackled only through rigorous and intense, always politically difficult, local policing and enforcement, mostly beyond the powers of mere utilities, leave alone private ones. Technology and privatization will not deliver on these. More on this in later posts.

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