The Centre’s $2.5bn Saubhagya power plan to electrify all households by December 2018 may not be easily achievable through the chronically loss making power distribution companies (DISCOMS). Experts are calling it a hype.
This is because the DISCOMS’ losses are estimated to be at over $61mn. They sell power to the farming sector at below cost, and suffer massive waste under the ‘open access’ system that allows (industry) clients the right to buy power from producers other than the state DISCOM. This has resulted in power generators being unable to sell all of the power they generate, which has had them running at nearly half their installed capacities.
The power for all plan could act as a “major stimulus” for India’s power sector, with power demands expected to swell by 35%, even though CRISIL has ruled out any increase in electricity demand before 2022. State governments are being encouraged to take up an increasing share of the DISCOMS’ losses each year, and the additional demand of 28,000 MW means that the DISCOMS can potentially garner $3.6bn of additional revenue.
Also, the government is doing away with any “free power” to customers. For remote locations, instead of extending the grid, the government will provide 200-300W solar panels, LED lights and DC fans and charging points to the end users, along with 5 year maintenance.