Investment Will Not Come In Unviable Power Sector, Says RK Singh
Raj Kumar Singh, India's minister of state at the ministries of power and new & renewable energy, speaks during the India Energy Forum by Ceraweek in New Delhi, India (Photographer: Anindito Mukherjee/Bloomberg)

Investment Will Not Come In Unviable Power Sector, Says RK Singh

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Power Minister RK Singh on Monday expressed concerns about the sustainability of state-owned loss making discoms saying investments in the power sector will not come unless there is viability in the system.

"Investment will not come unless and until there is viability in the system, unless and until the people who put money are assured that power they generate and sell will be paid for. That is the basic problem of sustainability we are facing," Singh said at the 93rd annual general meeting of industry chamber FICCI.

Singh's statement assumes significance as India aims to move towards higher economic growth rate which requires an efficient and vibrant power sector.

The minister further said, "I am worried about sustainability (of discoms) because a large number of discoms are loss making. Most of the state-owned discoms are loss making. None of the private-owned discoms are loss making as their aggregate technical and commercial (AT&C) losses are below norm."

The minister further explained that the discoms are not able to pay for the power supply from gencos because they are making losses, "which causes stress upstream and dampens investment".

The minister was of the view that the major reason for losses of discoms is inefficient billing and collections and if that is set right then every discoms would be profitable.

The minister said that he has been writing to the states to shift to prepaid metering system so that human interface is removed from the billing as well as the collection process.

The minister also highlighted that states are providing power subsidy for certain set of consumers but they need to pay for that to gencos because electricity does not come free.

The minister also informed that he has put before the Finance Commission that the non-payment for power supply to gencos should be added to their contingent liability which reduces their borrowing capacity accordingly.

On disinvestment of discoms, the minister said the workers unions do not realize that discoms losses are not sustainable. The minister opined that if investments will not come and India will be a power deficit country and then how can it become an advanced country, he questioned.

On farm laws facing protests, he said these laws would help in removing intermediaries and will bring investments in agriculture.

On power demand in the country, he said it has remained five gigawatt to ten gigawatt higher on a daily basis in December so far and had recorded nearly 12% growth in October year-on-year.

He also said that power availability has been improved from eleven hours to 21 hours a day which would be further increased to 24 hours in a day. Furthermore, he added that India would have 65% of energy from non-fossil fuels by 2030 and have already achieved 38% against the target of 40%.

"The Indian Power Sector is currently in a state of transition and is witnessing a rapid change in the electricity mix. India's target of achieving 175 Gigawatts of renewable energy capacity by 2022 and 450 Gigawatts by 2030, supported by policy and regulatory push, has put India among the top countries in the world for its efforts towards promoting renewable energy sources," Sangita Reddy, President, FICCI said.

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