Increase in power tariffs a ‘bitter pill’, says Scindia

Terming rise in tariffs as a "bitter pill", power minister Jyotiraditya Scindia has said that Indian power distribution companies (discoms) need to reduce technical and commercial losses to improve financial health.

Amid rising concerns about the precarious financial state of the discoms, Scindia said that there were two ways to make them better. "One is to take the bitter pill of raising the power tariffs, which is not in the hands of the central government alone as it is a state government initiative and responsibility in our federal setup."

"The other way is to reduce the AT&C (aggregate technical & commercial) losses, making the discoms much more financially healthy. And if you are able to do that, then it does not necessarily result in raising power tariffs," Scindia said in an interview at the World Economic Forum.

"I think a balance of both needs to be done and my impetus is not only on the issue of tariffs. Rather my impetus is more on the issue of reducing the AT&C losses and making the discoms much more viable," he said.

AT&C is a true indicator of total losses in the power distribution system.

High technical losses in the system are primarily due to inadequate investments over the years for system improvement works while commercial losses are mainly on account of low metering efficiency, theft and pilferage. Besides high AT&C losses, lower tariff has been blamed for the poor financial health of the discoms.

The power ministry is working on a R1,90,000-crore financial restructuring package (FRP) for state-owned discoms. Scindia said his ministry is expected to proceed further with the plan in a month's time.

On demands for hike in power tariffs, the minister said that nearly all states have revised them already. "There are three or four states left that are still working on it (tariff revision). I think that is now going to be an ongoing process," he added.

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