Criticism of the politicisation of electricity in India, particularly through populist measures such as free power, has been raised by Union Minister for Power and Renewable Energy, RK Singh.
Speaking at a conference of the Confederation of Indian Industry (CII), Singh highlighted the government's aim to eliminate all legacy dues owed by distribution companies (discoms) to generating companies (gencos) within the next 8-9 months.
Singh emphasised that the government has taken steps to ensure the viability of power utilities by implementing reforms related to payment discipline. This includes addressing both current and legacy dues.
The minister stated that legacy dues have been reduced to nearly 50% of their previous amount and the government intends to clear them completely within the given timeframe. He also mentioned that current dues have been cleared up to date.
In addition, Singh pointed out that Aggregate Technical & Commercial (AT&C) losses of discoms have decreased from 22 percent to 17 percent and the government aims to further reduce it below 15 percent in the upcoming year.
Singh expressed concern about the politicisation of the power sector over the years, stating that there is no such thing as free power. He explained that when power is claimed to be free, it actually translates into increased taxes for taxpayers, as they ultimately bear the cost.
The minister highlighted that such practices have led to increased liabilities and vulnerabilities within power utilities.
To address these issues, the government introduced late payment surcharge rules and the revamped distribution sector scheme (RDSS), which enforce timely payment of dues. If the dues are not paid, the electricity supply to the utility is cut off.
Encouraging stakeholders to invest in the power sector, Singh noted the increasing demand and the shift in trends. He mentioned that assets that were previously being sent to the National Company Law Tribunal (NCLT) were now being bought at higher rates due to growing demand.
Singh also highlighted the shift toward selling power in the exchange rather than entering into long-term power purchase agreements (PPAs), indicating a reversal of the previous trend.
Overall, the minister's remarks underscore the government's efforts to address the challenges posed by the politicisation of electricity in India, improve payment discipline, reduce dues, and enhance the viability of power utilities.