Terming distribution utilities as the weakest link of Indian power sector, World Bank, in its latest report, has highlighted that power distribution in India needs sweeping reforms in order to achieve the target of expanding access to electricity to all people by 2019.
The World Bank’s report titled 'More Power to India - the challenges of electricity distribution' has stated that financial health of utilities is limiting their ability to invest for the delivery of better services and even if electricity tariff rise by 6% per year to keep up with the cost of supply, annual losses of utilities will reach Rs 1.25 lakh crore in 2017. The accumulated losses of power distribution utilities totaled at Rs 1.14 lakh crore in 2011.
World Bank emphasized that it has become imperative for India to ensure effective targeting of subsidies as half the financial support is not reaching the targeted beneficiaries. The report also recommended freeing utilities and regulators from external interference, increasing accountability and enhancing competition in the sector for better service delivery. India's annual per capita power sector consumption is at around 800 units, which is among the lowest levels in the world.
Power or electricity is very essential constituent of infrastructure affecting economic growth and welfare of the country. The Indian power sector is the fifth largest and one of the most diversified sectors in the world with an installed capacity of around 230 GW out of which coal-fired plants account for about 68% of India's installed electricity capacity. Acute fuels shortage particularly coal in the country has also become primary reason for power deficit in the country. Currently, India has been witnessing peak hour power deficit at around 3-5 %.