At present, the power sector is reeling under pressure from several directions – from stressed assets in generation to the fragile financial health of distribution companies. The issues of delayed payments to gencos and renegotiation of power purchase agreements by discoms has exacerbated the sector’s woes. Given the significance of the power sector in the economy, these issues need to be resolved expeditiously. In this context, the government is working on a slew of reforms including changes in the tariff policy, the Ujwal Discom Assurance Yojana (UDAY) 2.0, and implementation of the recommendations of the High Level Empowered Committee, with the ultimate objective of 24×7 quality power supply and sustainable utilities. Budget 2019-20 has also proposed the removal of barriers like cross-subsidy surcharges, and undesirable duties on open access sale and captive generation. Besides, the government has proposed the launch of a special package for the sector. The budget has also laid emphasis on creating a vibrant power market with the implementation of the “One Nation, One Grid” initiative. At a recent India Infrastructure conference, S.C. Garg, secretary, Ministry of Power (MoP), shared his views on the power sector’s role and his plans for the sector going forward. Excerpts…
The power sector is an extremely important constituent of the vision of making the country a $5 trillion economy by 2024-25 and a $10 trillion economy by 2032, as highlighted in the latest budget speech. This dream cannot be realised unless the power sector performs. Economic growth is heavily dependent on the power sector’s performance. We have had challenges in the sector owing to the health of discoms, and this needs to be resolved. Further, the ease of living or standard of living cannot improve unless power is available to everyone. The MoP is overseeing several initiatives to expand the distribution network and ensure that power reaches every household in the country. The Pradhan Mantri Sahaj Bijli Har Ghar Yojana and other electrification schemes are aimed at achieving universal electrification.
“We will have to look for better ways of improving the health of the sector.”
Budget highlights
The budget speaks about carrying out the remaining reforms recommended by the High Level Empowered Committee headed by the cabinet secretary and formed to deal with old power plants. Accordingly, we have to improve efficiency in power generation and bring down the cost of generation. Further, public-private partnerships and private participation in infrastructure sectors will be encouraged. This will have several implications for the power sector and allow greater inflow of foreign direct investment, including external commercial borrowings. The power sector is using these facilities to quite an extent to avail of financing.
Agenda going forward
In the past, we have made several attempts to find solutions for the distribution segment under UDAY for strengthening the overall power sector. Though financial bailouts have been tried, they have not worked well, so we probably need to look at newer solutions. I think we will have to look for better ways of improving the health of the sector going forward. I do not have any prescription per se for the states. However, we will work with them to find appropriate solutions.
I have several important issues on my agenda including distribution reforms, improving finances of the power sector, and enhancing generation. In some cases, the power purchase agreements are being questioned. Further, there are tariff policy issues that are very important and need to be resolved. We have to also bring stability into the sector.
I have recently taken charge at this ministry and I will do my best to contribute as much as I can to strengthen the power sector during my tenure.