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Sunday, March 21, 2010

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Power cos losing Rs 30K cr annually

Distribution Utilities Unable To Recover Cost Due To Theft, Poor Billing

Mahendra Kumar Singh | TNN

New Delhi: The average cost of electricity in India may be the highest in the world but distribution utilites are losing around Rs 30,000 crore annually because they cannot recover the cost due to theft and poor billing practices, an industry euphemism for ‘transmission and distribution losses’.
Indicating that outdated networks are adding to the losses of distribution companies, the Planning Commission sees the average cost of taking power to the consumer’s doorstep increasing from Rs 3.60 per unit in 2005-06 to Rs 4.16 per unit in 2009-10, or an increase of 15.5%.
Against this level of rise in the
costs, average tariff has increased from Rs 2.87 per unit to Rs 3.37 in the same period, marking a 17.4% increase. “The gap has increased to around 89 paise per unit in 2009-10,” the panel says in its mid-term review of the 11th Plan.
Another reason for
the utilities losing money in their distribution operation, the panel notes, is their failure to recover the cost owing to unsustainable level of technical and commercial losses due to pilferages and inefficiencies in metering and billing. According to the midterm review (MTR), the financial performance of 20 major states barring Delhi and Orissa discloses that total expenditure in distribution was Rs 2,03,097 crore in 2008-09, which is likely to be Rs 2,25,282 crore this fiscal, while commercial losses without subsidy worked out to Rs 40,910 crore in 2008-09 and are likely to be Rs 38,420 crore this fiscal.
The average tariff was Rs 328.57 crore (at Rs 14.22 paise/Kwh) in 2008-09, which is likely to go up to Rs 338.32 crore (at Rs 17.47 paise/Kwh). “The gap between average cost of supply and average tariff has been found to be around 104 paise in 2008-09 and is expected to be around 89 paise in 2009-
10,” the document suggests.
Criticising the distribution utilities for their poor power procurement planning, the MTR suggested that the distribution sector required substantial improvements in business planning and forecasting to manage its finances and operations better.
“Much of the present cost problems are on account of poor power procurement planning and contract management,” the panel argued.
It called for for improvement in customer service and management methods which would lead to greater customer satisfaction and overall reduction in service costs and also facilitate in implementing cost reflective tariffs and timely payments from consumers.


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