JAM trin­ity to help im­prove sub­sidy de­liv­ery ef­fi­ciency in power sec­tor by Umesh Agrawal, Di­rec­tor – En­ergy, Util­i­ties & Min­ing, PwC.

Power Watch India - - CONTENTS - By Umesh Agrawal

One of the sig­nif­i­cant is­sues im­pact­ing the elec­tric­ity sec­tor is the fact that elec­tric­ity tar­iffs are de­signed to ad­dress the is­sue of af­ford­abil­ity of dif­fer­ent cus­tomer seg­ments so that every­body has ac­cess to power at tar­iffs as per his af­ford­abil­ity. This has led to tar­iffs for some cat­e­gory, say, hoard­ings and ad­ver­tise­ments sig­nif­i­cantly higher that other con­sumers. Ad­di­tion­ally the tar­iffs for bulk cus­tomers fol­lows an in­verse eco­nomic logic. This pos­si­bly worked fine in a sit­u­a­tion of deficit. Now with in­creas­ing the lev­els of ac­cess and pre­vail­ing sur­plus sit­u­a­tion cre­ates an op­por­tu­nity to re­form the tar­iffs by de­vel­op­ing pro­cesses for tar­get­ing the sub­sidy de­liv­ery mech­a­nism in such a way that they are de­liv­ered to peo­ple who need and cre­ate ef­fi­ciency in the sys­tem. In this con­text, the ex­per­i­ment of the government with re­spect to LPG and ben­e­fits un­der other government schemes have taught us sev­eral lessons and we think it is time we ex­tend the con­cept of using Jand­han ac­counts, Aad­har and Mo­bile Trin­ity to elec­tric­ity sup­ply to im­prove the sub­sidy de­liv­ery mech­a­nism. This will en­sure that only the de­fined con­sumers re­ceive sub­sidy and that too di­rectly in their ac­counts. This will en­sure that:

- Sub­sidy is tar­geted and di­rectly reaches those who need the same. Pre­vents leak­age and im­proves the sub­sidy de­liv­ery mech­a­nism

- End user de­vel­ops more con­cerns for bring­ing about ef­fi­ciency in use of en­ergy – Helps de­velop an ef­fi­cient econ­omy and there are nat­u­ral in­cen­tives for sub­sidised groups to use en­ergy ef­fi­ciently. - Helps util­i­ties be­come more in­de­pen­dent en­ti­ties run­ning on com­mer­cial lines. Once the so­cial re­spon­si­bil­i­ties of util­i­ties are di­rected and han­dled by the government di­rectly, the util­i­ties will be­come purely for profit com­mer­cial or­gan­i­sa­tions re­spon- sible to the share­hold­ers and that will be a sig­nif­i­cant change to the gen­eral out­look to­wards the state owned elec­tric­ity util­i­ties. Their abil­ity to de­velop in­ter­nal ex­per­tise and bring­ing in ex­ter­nal ex­per­tise to bench­mark the busi­ness pro­cesses with the best in the world will im­prove sig­nif­i­cantly. Fur­ther the en­vis­aged vi­sion of Dig­i­tal In­dia makes this trans­for­ma­tion much eas­ier.

More im­por­tantly, such an ini­tia­tive will help distribution util­i­ties turn­around per­pet­u­ally and we may need an­other round of UDAY af­ter a few years. Heathy distribution com­pa­nies will also help state government mon­e­tise their hold­ings and use the pro­ceeds for other sec­tors and ini­tia­tives of the state which has more wel­fare ben­e­fits.

UDAY scheme of the government of In­dia is a pow­er­ful tool to ini­ti­ate the turn­around of the distribution com­pa­nies and the same is re­flected in the num­ber of states who have joined the scheme, even though, join­ing the scheme is vol­un­tary. The scheme helps re­duce the debt bur­den of util­i­ties and cre­ates an en­vi­ron­ment and roadmap for a turn­around of util­i­ties. The su­pe­rior health of distribution util­i­ties can sig­nif­i­cantly help im­pact all the stake­hold­ers in the sec­tor – in­vestors, lenders and the con­sumers. While financial turn­around is fine, bring­ing ben­e­fits of Jand­han Ad­har Mo­bile to the elec­tric­ity sec­tor is cru­cial to en­sure sus­tain­able per­for­mance of the sec­tor.

The au­thor is Di­rec­tor – En­ergy, Util­i­ties & Min­ing, Price­Wa­ter­house­Coop­ers (PwC) Pvt Ltd

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