India needs a good dose of private investment to make power distribution viable, and a strong regulatory framework to attract foreign investment, Niti Aayog CEO Amitabh Kant said.
Foreign direct investment (FDI) in India has grown by 66% at a time when investment across the globe has fallen by 30%, but FDI in the power sector can come in only if the regulatory regime is predictable and consistent, Kant said at the FSR Global Hub launch event conducted by the Florence School of Regulation and European University Institute.
In September, total overdue amount on power distribution companies, which was not cleared even after 60 days of grace period offered by generators, was estimated to be Rs 52,408 crore against Rs 34,658 crore in the same month last year.
In order to give relief to power generation companies, the Centre has enforced a payment security mechanism where discoms are required to open letters of credit (LoC) for getting power supply.
Echoing this thought, RP Singh, chairman at Uttar Pradesh Electricity Regulatory Commission (UPERC), said without smart metering, Indiaâ€™s power sector will remain in financial stress.
â€œWe are trying to procure 1 million smart meters and when we are trying to go a long way in a short period of time, we will be facing many challenges. But, unless 100% smart metering is completed, financial management of the discoms is likely to remain under stressâ€ added Singh at a panel discussion on regulatory innovation at the same event.
Energy Efficiency Services Ltd (EESL) has installed over 500,000 smart meters in Uttar Pradesh, Delhi, Haryana, Bihar and Andhra Pradesh during August this year. The smart meters operational in these states were set up to enhance consumer convenience and rationalise electricity consumption.
The total regulatory assets of the three discoms in Delhiâ€”BSES Yamuna Power, BSES Rajdhani Power and Tata Power Delhi Distribution-â€”have shot up from Rs 937 crore in 2008 to Rs 11,406 crore in 2014. The gap between expenses shown by power discoms and the revenue recovered from consumers would accumulate as regulatory assets over the years.
Referred from economic times