Terming the rise in tariffs as a “bitter pill”, power minister Jyotiraditya Scindia has said Indian power distribution companies need to reduce technical and commercial losses to improve financial health.
Amid rising concerns about the precarious financial position of discoms, Scindia said there were two ways to make their health better. “One is to take the bitter pill of raising the power tariffs, which is not in the hands of the central government alone as it is a state government initiative and responsibility.”
“The other way is to reduce the AT&C (aggregate technical and commercial) losses and to make those discoms much more financially healthy and if you are able to do that then it does not necessarily result in raising power tariffs,” said Scindia. “I think a balance of both needs to be done and my impetus is not only on the issue of tariffs. Rather my impetus is more on the issue of reducing the AT&C losses and making the discoms much more viable.”
AT&C is a true indicator of total losses in the system.
Besides high AT&C losses, lower tariffs are among the other factors blamed for the poor financial health of discoms.
The ministry is working on a Rs. 1,90,000-crore financial restructuring package for discoms.
On demands for hike in power tariffs, the minister said nearly all states have revised them already. “All these states have done that and there are three or four states left that are still working on it. I think that is an ongoing process.”
“The key issue is not the rise in power tariffs. The key issue is financial health of discoms, because if you want the power sector to grow, it can not grow in isolation. It has to grow across the value chain, so it has to grow in transmission and in distribution and key to this lies in the financial health of the discoms.”