Power gridlock

Updated: May 31 2014, 09:38am hrs
Despite state governments taking various reform measures in the power sector, issues like fuel shortage, non-remunerative tariffs and high subsidies have further ensured deterioration in the financial health of the state electricity boards. While the average cost of power supply increased from R4.71 per kWh in 2009-10 to R5.93 per kWh in 2013-14, power tariff went up from R3.27 to R4.8 per kWh. As a result, the gap between the cost of supply and the average tariff has been widening over the years, adding to the strain on state power utilities.

The share of power sales to the agriculture sector has gone down from 23% in FY10 to 22.5% and that of industry too dropped from 32% to 31%; the share of domestic sector went up from 23% to 24%. Power tariff in the agriculture sector has risen almost 80% between FY10 and FY14 and that of industrial sector by 37% and domestic sector by 50% during the same period. Power tariff is highest in West Bengal at R5.36 per kWh and the lowest in Manipur at R2.86 per kWh.

A Planning Commission report on the working of state power utilities and electricity departments clearly indicates that reform measures taken by the states have not succeeded in reversing the downward trend. As a result of subsidised power supplies to domestic and agriculture sector by various state governments, commercial losses (without subsidy) of state power utilities have mounted from R20,860 crore in 1992-93 to R71,271 crore in 2013-14. Gross subsidy on agriculture, domestic and inter-state has increased from R70,012 crore in 2009-10 to R1,19,621 crore in 2013-14.