Same old refrain: Unrealised bills, rising costs, weak infra …
Imkong Walling
Dimapur | November 18
Nagaland is losing up to Rs 4 per unit of electricity. As per the latest official data, the state has the widest gap between Average Cost of Supply (ACS) and Average Revenue Realised (ARR) in the country. This gap in the other north-east states is said to be around Rs 1.5 and at breakeven point in the more prosperous states like Gujarat, Andhra Pradesh and Goa.
The deplorable revenue showing in Nagaland has been attributed to a variety of factors, among which is a term known in the energy trade as Aggregate Technical and Commercial Losses (AT & C Losses).
AT & C Losses is defined as the cumulative financial loss incurred as a result of non-realisation of bills and the loss incurred during long distance transmission and distribution of energy. At present, the AT & C Loss in the state is pegged at around 70 percent, placing Nagaland way above other states in the north-eastern region and the country in general.
In the other NE states, it is stated to be below 20 percent. (See table for comparison)
In terms of availability, the state has not fared well either, averaging 16-18 hours a day.
ACS-ARR gap, AT&C Losses and electricity availability are three parameters that rate the performance of a Power utility and also serve as indicators of economic health.
As per the data, the AT&C Losses in countries like Japan, the USA and Europe is estimated to be between 2 to 5 percent, while the gap between ACS and ARR is said to be in minus figure.
For the financial year 2020-21 alone, the total loss incurred by the state translated into Rs 266.11cr gap— a collection of Rs 172.51cr in revenue against a total purchase cost of Rs 438.62cr, as per Department of Power Nagaland (DoPN) data.
Who is accountable?
Going by the prevailing trend, the annual purchase cost is projected to hit the 1000cr mark in 5-6 years. A DoPN official posed, “Who is accountable— is it the Department, the public, the government or a social problem?” “Can the Government continue to bear the cost of purchase along with the cost of Operations and Maintenance (O&M)?”
It arises from an alleged public inclination to view government-owned utilities from a welfare angle.
On the contrary, the DoPN asserts that electricity involves big expenses. “Electricity is supplied to the consumers through a complex ‘Transmission’ and ‘Distribution’ network” the official said, while maintaining that the distributors require money to keep the supply chain running and paying employees.
In an ideal scenario, the expenses incurred for the service is recovered from the end-users or consumers.
While not abandoning the welfare side of governance, the official said that there should be a balancing act between the welfare and commercial aspects, as far as electricity is concerned.
For the knowledge of consumers, ‘Distribution’ and ‘Transmission’ are two distinct stages in the electricity supply chain.
The ‘Transmission’ stage is where electricity is evacuated from the generation plants to power stations, whereas, the ‘Distribution’ stage is where electricity is distributed or brought to consumers from the sub-stations.
Belling the cat
A financially efficient utility is determined by the gap in the cost of supply and the revenue realized from the consumers.
In Nagaland, the DoPN claims that the ‘Distribution’ segment is where the problem lays i.e. unrealised bills or deficit revenue. In addition, weak ‘Transmission and Distribution’ infrastructure/network is compounding the problem, while raking up huge debts due to the generation companies. It is a problem not uncommon in India but in Nagaland’s case, a chronic one.
According to the official, “The ‘Distribution’ segment is the key to the sustainability of the overall Power Sector. If this sector is financially sick, the whole process gets affected and the power sector suffers.”
Belling the cat however remains the biggest challenge. Will it be prepaid metering, outsourcing the revenue/commercial component, wholly privatising the energy sector or righting the familiar and persisting wrongs in the prevailing postpaid scheme of things?
