Although the 2012 financial restructuring plan (FRP) for state electricity boards (SEBs) initially helped reduce power theft and leakage, many of them have slipped into old habits in recent quarters, highlighting the intractability of the problem. A review of the ambitious Integrated Power Development Scheme (IPDS) revealed that among the four heavily-indebted SEBs, the Uttar Pradesh SEB reported a sharp increase in the aggregate technical and commercial (AT&C) losses to 39% in the first quarter of the current fiscal.
The country’s most populous state, with an outstanding power-sector debt of over R54,000 crore, had brought down the AT&C losses from about 42% in FY12 to 25% in FY14 thanks to 100% billing efficiency achieved on the back of the FRP promise of grants linked to theft reduction. But that was not to be sustained. SEB officials blame it on delayed payments by the state government.
While the national average AT&C losses came down marginally from 25.5% in FY12 to 23.8% in the Q1FY16, the losses have risen in laggard states like Haryana and Rajasthan. Haryana’s AT&C losses stood at 35% in Q1FY16, compared with 28% in FY12, whereas Rajasthan’s losses went up from 25% in FY12 to 29%.
Among the worse-off SEBs, only Tamil Nadu managed to achieve consistent reduction in AT&C losses during the FRP period — its losses came down from 22% in FY12 to 19% in Q1FY16.
The slippage in AT&C loss reduction comes at a time when the Union power ministry is considering a new package for SEBs. The proposed package, as FE reported earlier, envisages the respective states taking over the loans of SEBs on the strength of two-year waiver from FRBM norms and aggressive reduction in AT&C losses with the help of generous central assistance (of Rs 1.6 lakh crore over the next four years) under the IPDS and the Deen Dayal Gram Jyoti Yojana (DDGJY). The Centre feels that if a sharp AT&C loss reduction is achieved, big tariff hikes, which are politically difficult, could be avoided.
Among the SEBs, outstanding loans are the highest for Rajasthan at Rs 72,000 crore, followed by Tamil Nadu (Rs 66,000 crore).
The latest AT&C loss numbers, analysts said, reflected the failure of the under-performing states to adhere to the FRP milestones of reducing losses by 3% per year for states with over 30% AT&C losses and 1.5% for those with less than 30% losses.
“We managed to reduce our losses drastically in FY 14 due to the state-government clearing our pending bills,” a senior UP SEB official told FE. He added that it would difficult to reduce the theft unless the state government clear bills promptly.
Under IPDS, the government aims for a reduction in AT&C losses, the establishment of IT-enabled energy accounting /auditing systems, improvement in billed energy based on metered consumption and improvement in collection efficiency. The estimated cost of the scheme with the components of strengthening of sub-transmission and distribution networks, including metering of consumers in urban areas, is Rs 32,612 crore over the current Plan period which includes budgetary support of Rs. 25,354 crore. As part of the new package for SEBs, however, the funding for IPDS and DDGJY could be enhanced further.
