A growing pile of unpaid bills in India’s energy sector is putting the country’s growth at risk, Prime Minister Narendra Modi said, urging states to pay off their arrears to help modernize electricity systems, according to Bloomberg.
The South Asian country’s electricity retailers, which are mostly controlled by provincial governments, are saddled with heavy losses and collectively have nearly 1.4 trillion rupiah ($17.7 billion) in unpaid bills, as well as government subsidies them to provide cheaper power to some consumers, Modi said at a virtual event on Saturday.
As a result, utilities have amassed over 1 trillion rupees in overdue payments to generators, leaving distributors with insufficient resources to refurbish their networks.
Financially-strapped distributors are often seen as the weakest link in the country’s electricity industry, causing unease that ripples down the chain, from power producers, coal suppliers and project lenders. Almost 90% of India’s electricity is sold through these utilities, and their inability to pay on time is seen as holding back investment in the country’s energy transition.
“For the rapid development of the country, it is essential that its electrical and energy infrastructure is always strong,” Modi said. “Finding a solution to the current challenges is the need of the hour.”
On average, crippled distribution utilities miss payments for about one-fifth of the energy that passes through their network, mostly due to theft, leakage, and sloppy billing and collection. Policy interventions also mean they are forced to supply energy below cost to some consumers, including poor households and farmers, although compensation by state governments for such subsidized supplies is not always regular.
The Modi government has launched a 3.1 trillion rupee program to help turn around these companies, with the help of technology, including smart meters, and improving efficiency. A previous federal government-led plan launched in 2015 that aimed to revive retail companies by 2019 failed to achieve that goal.
Source: Capital
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