Kumar emphasised on the need to ensure free flow of power across grids. He believes distribution lines should be strengthened to lower transmission and distribution loss. Besides, he is also in favour of a single national grid for transmitting power across regions.
Moreover, Kumar stressed on the requirement for single window clearance model adopted for ultra modern power projects. Going forward, he sees recovery in power sector orders in the second half of fiscal year 2014 onwards and expects some margin pressures continuing for BHEL .
Here is the edited transcript of the interview on CNBC-TV18.
Q: Part of the power sector problems are with the Central Electricity Regulatory Commission (CERC) that is a regulatory body, part of them are perhaps impacted by environmental related issues and some of which could even be in the courts. So what exactly can the CCI resolve? If you have to order their agenda for the power sector, what will be the first two problems that you will put on their plate?
A: One thing is that the regulatory bodies must be free from political interference. That is not only CERC, the State Electricity Regulatory Commissions (SERCs) are also there. The SERC is independent of what is going on in the centre.
So as far as CERC and SERCs are concerned, they must be totally free to fix the tariffs depending on what is necessary and what is actually the rate of return for various developers, whether it is the state generating stations or central generating stations like National Thermal Power Corporation (NTPC) or it is private developers independent power producer (IPP) and all that.
If the electricity sector has to grow, they must be compensated by real tariff which is not too bad for consumers and at the same time, it is fair to both consumer as well as the generating companies. That is one thing which is necessary. Second thing is there is a lot of shortage in south and the rates are quite high. The merchant rates in the south are very high.
Whereas if you see in the western, eastern or in the northern region, it is around Rs 3.5 which will not compensate the IPPs to put up new plants or will not allow new IPPs to come up for the existing developers. So there is a need for rationalization and there must be enough corridors for transmitting power from north to south. The SERCs and CERCs must be independent, the regulators must be independent and there must be a regular tariff revision. Last year, there was good tariff revision and this financial year was one of the best years. There was a rise in tariffs almost everywhere.
Second is Aggregate Technical and Commercial (AT&C) losses. Competition is also very difficult and AT&C losses should be brought down to at least 12 percent in the country. It is quite high today, around 30 percent and in some places it is around 55 percent.
Q: Isn't that because there is wholesale pilferage at the state level and if it is not pilferage, then it is actually blessed by state level politicians? Can a cabinet committee of ministers really do much about these kinds of transmission and distribution (T&D) losses? May be some high-tension wires were recommended long back by Suresh Prabhu's ministry and that requires a whole lot of investment. What can they do about T&D losses?
A: Actually there must be separate feeders for agriculture and also other feeders and a meeting should be done electronically. In foreign countries, if you look at US or Europe, the pilferage is almost nil. Of course attitude of the people have to change but, definitely there must be some mechanism. One is tariff hike and recently the power ministry has told tariff hike is the last solution.
So definitely, there is necessity to reduce AT&C losses and also ensure tariff hikes. This is one thing that is necessary and there must be free flow of electricity from all grids and there must be a national grid so that a developer in the north should be able to pump electricity to the south.
More to come.
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