Why are states keeping citizens under darkness?

Most states are grappling with an acute power shortage even though Union Power Minister Piyush Goyal has revealed that the national power deficit has fallen to 3.6 per cent in 2014/15, a record low.

Man of the moment: Power Minister Piyush Goyal (Photo: Vivan Mehra) Man of the moment: Power Minister Piyush Goyal (Photo: Vivan Mehra)

Just a few miles away from the national capital Delhi, the industry in Uttar Pradesh's Ghaziabad district is forced to take a day off every week because the state power distribution companies dont have enough electricity to supply. It comes at a steep cost, according to various local industry bodies. It is estimated that the accumulated daily losses of the factories in this industrial district on account of the weekly off totes up to a staggering Rs 500 crore. In fact, in 2014/15 Uttar Pradesh drew only 35.7 billion units (BU), against entitlement of 38 BU, from the central government generation units when only a few pockets in the state have 24X7 power supply.

Indeed, it is much the same story in different parts of the country. Most states are grappling with an acute power shortage even though Union Power Minister Piyush Goyal has revealed that the national power deficit has fallen to 3.6 per cent in 2014/15, a record low. The reason: mounting losses of state distribution companies. According to the filings with the state power regulators across the country, 21 out of the 29 state distribution companies are reporting losses and the accumulated revenue deficit is more than Rs 2 lakh crore. They are not, therefore, willing to buy electricity and, instead, push for unscheduled power cuts.


Crippling power cuts in most states have cast a shadow on the curriculum vitae of Goyal, who enthusiastically flaunted his achievements on the first anniversary celebrations of the Narendra Modi government. Goyal also heads the ministries of coal and renewable power. India has generated 8.4 per cent more power in the past one year, there is additional capacity of 22,566 MW on stream and, on an average, every thermal power plant in the country has more than 20 days of coal stocks, asserts Goyal. He doesn't stop there, and takes the credit for the slide in power deficit.

But, the challenge for Goyal comes from big states like Uttar Pradesh. Most of the state's 20-crore population have to contend with erratic power supply. In his recent Budget, Chief Minister Akhilesh Yadav promised 24 hours of supply in urban areas, and 22 hours of electricity in rural areas by the end of this fiscal. He has also promised to increase the capacity utilisation to 21 GW over the next few years from the current estimates of 10 GW - to many, this is next to impossible. Meanwhile, Prime Minister Narendra Modi has promised access of 24X7 electricity to all households in the country by the end of his tenure in 2019.

Some states have to contend with lacklustre power output by their generation companies. They blame Goyal for irregular supplies of coal from Coal India. Yadav, for instance, says that power generation in his state has been hit because of the delays by Coal India in supplying the fuel on time, leading to load shedding. States prefer power from their own generation companies because it is cheaper and often available on credit. The latest Load Generation Balance Report published by the Central Electricity Autho-rity, also underlines that UP had failed to meet the peak demand of 16,350 MW in 2014/15 and, this year, it is not expected to do any better. Last year, UP supplied only 13,991 MW, 14.4 per cent short of the power demand.

22,566 MW
Power generation capacity added in the country in 2014/15

Plant load factor of thermal power plants in India

out of 29 state distribution companies are making losses

Meanwhile, power distribution companies continued to bleed. Tamil Nadu, Telangana and Karnataka in the south; Jammu and Kashmir, and Punjab in the north; Bihar and Jharkhand in the east, are all in trouble. In UP alone, the accumulated losses at all six distribution companies are more than Rs 13,000 crore. And the situation may not improve in the near future.

However, there is some cause for optimism. Some state governments - such as Madhya Pradesh and Rajasthan - have firmed up plans to clean up the books of power generation companies. Today, when the country's thermal power plants are operating at 65 per cent plant load factor - the figure was 60 per cent last year - and power is available, states are still pushing for power cuts. The state distribution companies can easily buy cheaper electricity from electricity exchanges. The national grid and Indian Energy Exchange saw prices drop from Rs 2.82 to Rs 2.56 a unit in the first three months of this fiscal. And at the energy exchange on April 29, electricity was available in the spot market at no charge. This was at peak time, 3.30 pm on a working Wednesday.


This is encouraging as many states are buying costlier electricity from power generation companies at up to Rs 5 per unit. They can now access cheaper electricity from the spot market. But state distribution companies bought only 30 per cent of the traded capacity at the exchange largely because of their bad financial health. The biggest beneficiaries of this are the large corporate and industrial houses in India.

The onus, then, is on the central and state governments to focus on measures to turn around the distribution companies.