Power generation improves, so does power theft

New Delhi, Feb 28: The Economic Survey today highlighted that power generation this year has grown by 7.6 per cent between April-November ...

New Delhi, Feb 28: The Economic Survey today highlighted that power generation this year has grown by 7.6 per cent between April-November 1999, over last year8217;s level. Despite this, subsidies from the State Electricity Boards SEBs to the agriculture and domestic users swelled to over Rs 33,820 crore during 1999-2000 showing an alomst 12 per cent increase over last year. Almost Rs 25,576 crore of these went to the agriculture sector, which according to the admission of Power Minister P R Kumaramangalam himself shows the extent of power theft in the country.

The Survey further clearly states that even if a minimum agriculture tariff of 50 paise per unit is charged it will still leave a large of SEB balancesheets in the red. In fact, the negative rate of return on the investments made by SEBs stands at 31 per cent compared with 27.5 per cent last year.

Despite the dismal performance of private sector participation in the power sector, the Survey is optimistic about the potential for commercialisation and competition in infrastructure saying it is more widespread than is commonly perceived. It says private power projects cannot be sustained purely through credit enhancements like government guarantees and escrow mechanisms. This can only be done through reform of the SEB structure to bring efficiencies in generation, transmission and distribution operations.

While the potential for independent power projects IPPs is wellknown, the opportunities in power distribution are not so widely recognised.

Privatisation of distribution would bring forth better monitoring of power supplied because the private entrepreneurs would have a stake in it. This, in turn, would be reflected in improved revenues by cutting distribution losses that originate from uncharged supplies.

On the road sector, it says a significant policy issue under consideration is on the desirability of shifting from direct tolling to annuity-based payments to operators. Annuity-based payments would imply that the government would have the advantage of deferred payments.

However, it is important to note that unlike direct tolling in a build-operate-transfer BOT approach or the concept of shadow tolling, under annuity-based payments, the concessionaire assumes no revenue risk.

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On ports, the Survey says there is need to enhance productivity by developing a series of specialised minor ports, along the coastline in order to divert traffic from the congested major ports.

On Railways, the surveys suggests that the sector needs to regain its share in freight traffic, which has slipped in recent times in favour of road transport, through qualitative capacity augmentation aided by corrective pricing policies and organisational changes.

Over the years, the railways have kept passenger fares low and the consequent losses are being met through cross-subsidy by the freight business. This cross-subsidisation needs to be contained.

For the telecom sector, the Survey spells out a target of phone on demand by 2002 and coverage of all villages by telephones by the same year. These targets have been set on several occasions over the last three or four years. Deficits of the Postal Department stood at 1,591 crore.