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Curing discoms of losses: Tariff revision, privatisation & dynamic power market are must, say experts

PTC India Limited Director Dr Rajib K Mishra said on Thursday that there is a dire need for tariffs to reflect the cost of supply to address the stress on discoms

PTC India Limited Director Dr Rajib K Mishra said on Thursday that there is a dire need for tariffs to reflect the cost of supply to address the stress on discoms.
PTC India Limited Director Dr Rajib K Mishra said on Thursday that there is a dire need for tariffs to reflect the cost of supply to address the stress on discoms.
  • Mishra said that the present power market requires dynamism instead of a linear approach to power planning

  • Prabir Neogi, Chief Executive of Kolkata-based CESC Limited, said that the retail tariff construct which reflects the average needs to be reviewed

New Delhi: While pointing out that the poor health of power discoms, which form the only interface between end consumers and primary source of electricity inflow, has become the biggest issue in the power sector, PTC India Limited Director Dr Rajib K Mishra said on Thursday that there is a dire need for tariffs to reflect the cost of supply. While addressing a webinar on Electricity Distribution - Creating the Change, organised by RTI International India and India Smart Grid Forum, Mishra said that the present power market requires dynamism instead of a linear approach to power planning.

Discoms: Dire need for tariff revision, opening sector to private players

Quoting a PFC report which showed that five states accounted for around 80 percent of total losses accumulated by discoms, Mishra said that on close observation, each of the five states have accumulated losses because of their own set of unique problems, which call for customised solutions. However, he added that the issue of tariff revision and management of energy portfolio are universal in nature and impact all discoms alike. Mishra also proposed separation of carriage and content businesses of discoms and the freedom for consumers to choose their own supplier in order to address the debt burden on discoms.

Also read: The burden of discom dues on PSUs: From NTPC to CIL, everyone is waiting for payments

Prabir Neogi, Chief Executive of Kolkata-based CESC Limited, said that the retail tariff construct which reflects the average needs to be reviewed. He also proposed opening up the discom sector further for private players in order to bring in competition and added that increased competition will address the pricing issue and keep tariffs from rising.

The let’s-give-it-cheap mindset needs to change: RTI International Country Director

“Wherever tariffs have raised, they have raised out of compulsion and not out of choice. Wherever the losses are high, regulators had no choice but to increase tariffs to improve the finances. And where regulators could get away with low tariff trajectory, there was a socialist, populist pressure to not increase tariff. So, my problem is partly with the mindset that says, let’s give it cheap. I don’t think that mindset betrays the mindset of a consumer of the 21st century. There are consumers who are paying power-backup prices at much higher tariffs, simply because they want uninterrupted power supply... I don’t think this obsession with L1/low tariff/high subsidies is going to get us anywhere in the near future,” said RTI International’s Country Director and energy expert Shalabh Srivastava.

He stressed that those discoms that are in poor health need to be privatised in order to get them back on their feet and a public-private partnership model is the way to address stress in the sector. 

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