Govt will need to invest Rs 15.70 lakh cr for 24x7 power supply by 2018-19: report

The Bharatiya Janata Party-led National Democratic Alliance government will need to invest Rs 15.70 lakh crore to provide 24x7 power supply to all consumers, according to a panel report.

A sub group appointed by the Forum Of Regulators (FOR) has said around 1,280 billion units (BUs) will be needed to service the 24x7 requirements.

The panel was headed by Karnataka Electricity Regulatory Commission chairperson Sreenivasa Murthy.

The cost of servicing this capital works out to Rs 1.59 per unit. Subtracting the transmission losses, which should go down to 17.5% by 2018-19, the tariff should come down by 50 paise, bringing down the capital cost to Rs 1.09 per unit, it said.

FOR has forwarded its report to the union ministry of power for further action.

The sub group said in its report that generation projects that are likely to start by 2018-19 should be given priority in fuel linkages.

It added that priority should be given to achieve plant load factor (PLF) of 80 to 85% for coal-based thermal plants so adequate coal linkages and supplies can be ensured for all commissioned capacities and for plants likely to be commissioned within next five years. This is necessitated as the projected domestic coal requirement will be over 800 million tonne by 2016-17 against the projected availability of 560 million tonne for the power sector.

The sub group has a made a strong case for the formation of a special purpose vehicle to expedite environmental and other clearances before auctioning of coal blocks to mining companies. It has suggested that the concept to commissioning time be pruned to 40 months for generation and the conceptualization to award process be reduced to 5-6 months from 21 months.

As far as gas-based power projects are concerned, they should be bundled with other sources of energy to make peak power affordable for distribution companies.

It has also urged the government to add renewable capacity particularly in solar and wind energy considering the short gestation period.

The sub group has pitched for a 'Mission Mode' approach to provide electricity to all households, particularly in states that have less than the national average proportion of electrified households. A separate machinery with special funding arrangements should be carved out to implement the programme in states like Bihar, Assam, Uttar Pradesh, Jharkhand and Orissa, where less than 50% of the households have access to electricity.

It has further argued for a special programme aimed at reducing transmission and commercial losses and bring them down by 2% per year over the next five years.

Besides, it has said star rated pumps should be made mandatory where agricultural consumption exceeds 10% of the total electricity consumed in the state. In addition to this, adoption of solar irrigation pumps need to be encouraged by providing 50% of the cost subsidy.

In order to improve the financial health of the distribution sector in particular, the sub group has recommended the availability of adequate institutional finance, timely payment of subsidies by state governments and adequacy, regularity of tariff revision by the state electricity regulatory commissions and segregation of agricultural feeders from other rural feeders.