Power reforms in Punjab
Follow Andhra way to cut power theft
by R.K. Luna

After much dithering, the Punjab government has split the Punjab State Electricity Board (PSEB) into the Punjab State Power Corporation (Powercom) to manage generation and distribution and the Punjab State Transmission Corporation (Transco) to look after transmission. With the final notification regarding the sharing of assets and liabilities, these two companies have replaced the highly indebted but 43-year-old PSEB. However the most debated question is how and when the new structured regime will be able to deliver the goods and when the never-ending power cuts will cease. Most, however agree that mere restructuring will not make a substantial difference unless larger reforms are urgently done.

Though the state achieved 100 percent rural electrification in 1980s, yet the interrupted supply has been bothering both the households and the industry. Everyone gets affected due to faulty and inadequate supply of power. While the students lose study, the labourers lose wages and industrialists lose committed production. At the national level, the shortage of electricity affects the economic growth adversely.

In an agricultural state like Punjab, electricity affects productivity as it is used in pumping ground water for irrigation. After Gujarat and Haryana, Punjab has the highest annual per capita consumption of electricity in the agriculture sector (247.78 kWh). According to experts, the demand in agriculture has increased from a meager 463 million kWh units to 7,314 million kWh units from 1971 to 2006 mainly due to the increasing area under paddy. It is amazing that the state has 2,75,820 pending applications for electricity connections to farmers with an expected load of 1,32,505 kWh.

One of the main reasons ascribed to the poor growth of industry in the state is the irregular power supply at high costs which otherwise is available in plenty at cheap rates in the neighboring hill states like Jammu & Kashmir and Himachal Pradesh. Though the total consumption of electricity has increased from 19343.93 million kWh in the year 2001 to 24192.49 million kWh in the year 2006, demand is many times more.

Of the present consumption 75 per cent is self-generated in the state and the remaining 25 per cent is purchased from external sources at a high cost. In the peak demand season in June power is either not available from the national grid or is available at a high cost, further making a dent on the resources of the state. Power cuts ranging from 3 to 12 hours are not uncommon in the summer season throughout the state. A study by the National Applied Economic Research has pointed out that only 26 per cent of the households in Punjab receive 18 hours of electricity as against the national average of 57 per cent.

The first major task therefore confronting Powercom is to generate additional power to bridge the gap between demand and supply. The power generation strategy should focus on low-cost generation, local generation using non-conventional resources such as biomass, optimisation of capacity utilization and controlling the input cost. Though the power generation efficiency of thermal power plants in the state is reported to be 80.2 per cent against the national average of 69 per cent, the loss becomes substantial when taking into account the total installed capacity of thermal power of 3774 MW. Time framework for new thermal projects envisaged at Talwandi Sabo, Goindwal Sahib and Rajpura will be of critical importance as the delay will not only escalate the project cost but also be politically costly.

The plans to reduce the transmission and development losses (which are as high as 25.35 per cent) and to replace the old transmission lines along with stringent energy auditing are necessary for the economic viability of the new structured companies. The aggregate technical and commercial losses should at any cost have to be reduced to 15 per cent as projected by the Government of India.

The distribution strategy with a focus on system up-gradation, loss reduction and commercialisation should be the other hall marks of ensuing reforms. Inadequate investments over the years for system improvement works have particularly resulted in unplanned extensions of the distribution lines and overloading of the system at some places. Transco has to adequately address these problems by advanced planning, assessing the industrial and domestic needs and preparing a roadmap for future expansions.

The main reform envisaged in the Indian Electricity Act, 2003 is to make the availability of reliable quality power at competitive rates to the consumers. At present competition is virtually absent. The Act has provisions for free access to private participation in the power sector. Private investment up to 28 per cent in the 11th Plan period projected by the Government of India can be utilized for the maintenance of the huge network of substations, power stations and replacement of the old and inefficient distribution system. Given the clean balance sheets, the companies should strive to raise sustainable capital after meeting the liabilities and passing profits to the employees and the stakeholders to bring in a corporate culture.

What, however, will bother Transco is how to reduce the theft of electricity. This is neither a new problem nor confined to Punjab. Theft of electricity in India leads to annual losses estimated at $4.5 billion. It is amazing to find that only 80 per cent households receive bills from the official agencies, 9 per cent pay to neighbours or landlords and 11 per cent of households with electricity do not receive bills at all and thus make no payment.

Honest consumers, poor people and those without connections bear the burden of high tariffs, inadequate and unreliable power supply. Andhra Pradesh has shown the way to control this social evil since 1999 when only 42 per cent of electricity flowing was billed. The theft that occurred in several ways, including tapping power lines, tampering with or bypassing meters, often in connivance with the utility staff, was controlled by amending the Electricity Act and making electricity theft a cognizable offence, constituting special courts and appellate tribunals.

About 2 million high-accuracy meters were installed and old meters recalibrated for low-value consumers. The results were a substantial increase in billing, increase in collection to 98 per cent and decrease in transmission losses. Punjab can also adopt this tested methodology; however, there is no substitute for educating the people.

The conservation approach to optimize the utilization of electricity with a focus on demand side management, load management and technology upgradation to provide energy efficient equipment and gadgets is essential as energy saved is energy conserved. Punjab should follow the example of Uttar Pradesh, Haryana and Himachal Pradesh where incandescent bulbs have been replaced with CFLs in the domestic sector, whereas in Punjab the need has not even been recognized in the Government institutions.