Privatisation of power distribution: Power consumers willing to pay more if provided quality service
Power consumers are willing to take small hikes in tariff positively if they receive quality service and uninterrupted supply, according to a joint study by the International Institute for Sustainable Development (IISD) and Global Subsidies Initiative (GSI).
The study titled ‘Perceptions of Electricity Sector Reform in Uttar Pradesh’ examines tariff reforms as a solution to narrow down revenue gap. Through 2,330 surveys and 132 interviews, the report examined the perceptions and attitude of consumers – household, agricultural, commercial and industrial.
“Consumers are willing to view small tariff hikes positively if they see improvement in the quality of service. These may range from increasing the hours of supply to timely disposal of problems,” GSI policy analyst Shruti Sharma said.
“While there is no general sense of entitlement to free electricity, all consumer groups and an overwhelming 80 per cent of household consumers believe low income households should get free electricity,” she said.
The study has also made suggestions for the government.
“A long-term strategy focused on creating awareness may be formulated as almost all households and farmers are unaware of the cost of electricity and the subsidy they receive. This brings a sense of entitlement to low prices,” said Tom Moerenhout, an associate with GSI.
The study also reviewed how the Ujwal Discom Assurance Yojana (UDAY) reworked the debt of discoms to improve their financial health and operational performance.
It found that the progress on UDAY milestones had been limited as its implementation did not begin till mid-2017.
“Though some progress has been made on feeder metering, distribution of LEDs and electricity access to households, slippages should be expected as some targets will not see results for the next 2-3 years,” said energy specialist Vibhuti Garg.
As of late 2017, 49 per cent of UP households were yet to be electrified.
According to the study, growing demand for electrification and subsidies combined with a lack of revenue recovery conflicts with the ability of discoms to cover their costs resulted in an increasing revenue gap that peaked at Rs 21,486 crore in FY 2016.
Chairman of Uttar Pradesh Rajya Vidyut Upbhokta Parishad Avadhesh Kumar Varma said, “What would be the benefit of privatisation for consumers? Power distribution in Agra has already been spoiled and now they want to do the same in all major cities.”
“We will fight against privatisation with all reports and facts that we have with us. Privatisation is just to favour some private players,” he said.