Special Correspondent

Only 50% of targeted addition to generation capacity achieved

  • Gross subsidies up, returns on utilities deteriorate
  • EB finances worsen

    NEW DELHI: The Economic Survey presents a "grim picture" of the power sector, which achieved only half the targeted addition to generation capacity during the 10th Plan period, while the total losses of State utilities rose to over Rs. 26,000 crore in 2006-07.

    The Survey, presented by Finance Minister P. Chidambaram in Parliament on Tuesday, says the sector continued to remain in the dark with gross subsidies increasing to Rs. 40,131 crore and the rate of return on utilities deteriorating to negative 27.4 per cent in 2006-07 from negative 24.8 per cent a year ago.

    The 10th Plan capacity addition will fall short by 43 per cent at 23,250 MW against the target of 41,110 MW. In the Ninth Plan period, the country added a capacity of 19,000 MW, less than half the target. Moreover, the finances of the State Electricity Boards and utilities worsened as the total commercial losses rose to Rs. 26,150 crore from Rs. 21,110 crore. The losses are likely to decline to Rs. 21,391 crore in the next fiscal. Gross subsidy in the sector grew to Rs. 40,131 crore in the current fiscal from Rs. 36,398 crore.

    The rate of return on State utilities stood at negative 27.4 per cent in 2006-07, indicating that resources forgone in such poor returns remained very large, says the Survey. It stresses the need for carrying forward distribution reforms. "Unless effective steps are taken to slash transmission and distribution losses from 40 to 15 per cent, the electricity situation would not improve."

    Gas supply shortfall

    At the same time, power will be costly if the plants use alternative fuels in the absence of gas and if commitments on gas allocation to the generating stations are not fulfilled.

    A shortfall in gas supply hampers power generation. Of the 13,582-MW capacity, gas-based power plants, stations of 10,999 MW suffered fuel crunch. Formation of a strong national grid has been recognised as a flagship endeavour to steer the development of the power system for fulfilling the objective of "electricity to all" at affordable prices.

    The inter-regional transmission capacity of 11,450 MW is expected to increase to 15,750 MW by the end of the 10th Plan period and to 37,150 MW by the end of the 11th Plan period.