Regulator asks power utilities to focus on measures to improve efficiency
Hyderabad: The mounting debt burden of discoms and time to time support from the state government to bail out power utilities has turned out to be a major concern for the state’s power sector. Power utilities have accumulated losses of over `65,000 crore. The power finance corporation has even downgraded their ranking from B+ to C-. Major issues like transmission and distribution losses, inadequate infrastructure and near obsolete equipment, besides an array of issues compelled the Telangana Electricity Regulation Commission to direct discoms to comply with the standard performance regulations to improve their efficiency.
The losses have reduced profitability of distribution companies, leading to resource constraints and making it tough to invest in infrastructure upgrades. The issue is grave in rural areas as the dearth of infrastructure in particular is affecting the quality and consistency of power supply.
To make up the revenue gaps, discoms have been borrowing from the banks and other financial institutions to procure and pay for generators. In the process, the discoms have been bearing the interest cost. Due to the cash crunch, the discoms have been facing difficulties in making payments to generators due to which they have been taking working capital loans to meet the obligations.
Given the precarious situation, the regulator has asked discoms to go for standard performance regulation measures like going ahead with phase-wise limited automation and technology adoption, address skill gaps and workforce issues, improve revenue collections and adopt regulatory compliance and monitoring to bail them out of the dicey situation.
However, experts in the sector say that the subsidised power supply, which is often not being fully compensated by the government, is leading to revenue shortfalls. The inadequate tariff revisions due to political reasons resulting in recovering the operational and maintenance costs. The dependence on thermal power plants and high power purchase costs are also impacting the power utilities and the government must address those issues, said an official of the power sector.