Power Distribution in India: Trends and Outlook, Challenges and Opportunities, Dec.19-20, 2011, New Delhi

Mission:
- The distribution segment, which plays a critical role in the power sector value chain, is currently considered its weakest link. Despite major government initiatives (including the Rs 500 billion Restructured Accelerated Power Development and Reform Programme [R-APDRP]), aggregate technical and commercial (AT&C) losses remain close to 30 per cent. The high systemic losses have resulted from the many challenges currently faced by the utilities.

- Bottom lines are under stress in most of the utilities. This is mainly a result of inadequate tariff recovery and rising power procurement costs (besides high AT&C losses). The continued political interference has not helped the situation either. The cumulative financial losses of distribution utilities (about Rs 750 billion) may become unsustainable. They are already threatening the utilities’ creditworthiness. Other challenges for the segment include the less-than-satisfactory progress in tariff rationalisation, open access, competition, and separation of the wires and retail businesses.

- That said, some encouraging developments have taken place. A few utilities have achieved operational and commercial performance levels that are comparable to global standards. States have also begun experimenting with the distribution franchise model to seek private participation and improve performance, as witnessed in Uttar Pradesh, Madhya Pradesh, Bihar, Rajasthan and Haryana. The development of a robust network with credible information technology (IT) and IT-enabled infrastructure funded by the R-APDRP will also lead to greater operational efficiency through measures in areas like energy accounting, asset monitoring, consumer response and business processes excellence. The move towards smart grids has also begun with the formation of the Indian Smart Grid Forum, the discussion of a central policy and the initiation of pilot projects.