Power may trip economic growth: PM

New Delhi, May 28 | Updated: May 29 2007, 05:30am hrs
Warning that slippages in the power sector may trip economic growth, Prime Minister Manmohan Singh on Monday asked both states as well as the power ministry to reduce thefts, raise generation capacity and attract private investments to provide electricity to all households by 2012.

The scene in the power sector does not look very promising. In fact, time is running out and unless we are able to arrest the growing shortages, the effect on our economy may well prove disastrous, the Prime Minister said at a conference of state chief ministers on the power sector.

Singh said electricity was vital for sustained economic growth and a commensurate growth in the power supply was required to ensure that the economy keeps growing at 9-10%.

Listing his priorities, he said the Centre and states must take effective steps to check losses during transmission and distribution (T&D) of electricity.

The current level of T&D losses, ranging between 30% and 45% in many states, threatens the financial health of the sector... theft is the cancer of the power sector, he said.

The Prime Minister also expressed concern over the slow pace of capacity addition, with only half of the 10th Plan target of 41,000 mw being met in the five-year period.

This reflects poorly on the planning process as well as the implementation capability of the various agencies entrusted with this task, he said.

Singh said the sector required a crash programme for capacity addition to eliminate shortages by 2012 and pegged the investment needs at over Rs 6,00,000 crore during the 11th Plan period.

The Prime Minister admitted that the government has not been able to ensure high growth rate in the power sector and improve its financial health. He also said the sectors inability to attract private players on a big scale was a serious issue and suggested open access to consumers to encourage investment.

Open access will put competitive pressures on the incumbent utility. Lack of competition results in inefficiency, which in turn manifests itself in the form of high tariffs, poor standards of consumer service and low internal resource mobilisation, Singh said.