Pulling the plug on energy theft

UB Reddy, Managing Director, Enerfra Projects (India) Pvt Ltd.

The government has announced slew of initiatives to revive the power sector and UB Reddy, Managing Director, Enerfra Projects (India) Pvt Ltd believes that these initiatives have started delivering. He says, “In 2016-17, financial losses of discoms in UDAY’s 26 states and Puducherry came down by 21.5 per cent from Rs 51,000 crore in 2015-16 to Rs 40,000 crore in 2016-17. He further explains, “Reduced theft and increased collections are the top reason, followed by tariff changes.”

Enerfra Projects expects further improvement this year as dramatic reduction in theft in UP happened only after the elections in March 2017. “Reduction in losses is a major step in the long term goal of making discoms financially stable,” Reddy observes.

Another area with material improvement is that of coal supply. While some shortages do continue, coal supply has improved sharply, helping India become power surplus at generation level, says Reddy.

The game changer initiatives
At over 25 per cent, India’s aggregate technical and commercial losses (AT&C) still remain far too high. This is basically about theft prevention. The new power minister has emphasised a number of measures, including smart meters on all distribution transformers to track and stop theft. In some areas where billing by discoms is difficult, franchises will be given for billing and collection. According to Reddy this is an effective approach to eliminate theft and create local jobs. He says, “Plugging theft will be a slow change but one that will last for decades. So we continue to think of this as the game changer.”
He adds, “The central government plans to mandate each state to sign up for enough contracts to fulfil average annual demand of the state. This could be another game changer, if implemented effectively.”

Major changes during past one year
India has become surplus at a national level. Better coal availability is the top reason. This is a remarkable achievement. Reddy observes,. “We still have power cuts due to distribution system issues or lack of financial incentives for discoms to buy power above a certain tariff. We hope to see greater investment in the distribution network that will reduce outages and improve per capita consumption”.

As per Reddy, reduction in losses of discoms is a major achievement. Under UDAY, Rs 2.3 lakh crore of bonds have already been issued and there is an intent to issue another Rs 2.7 lakh crore. This would be the largest financial restructuring of discoms since independence, he says.

Enerfra’s performance during past one year
Enerfra’s focus on quality and transparency has been appreciated by the customers. Reddy announces, “We more than doubled our revenue in 2016-17 over 2015-16. We have also signed up a number of marquee clients.”

Innovative strategies to remain competitive
With a steep fall in tariffs, wind industry in India will be about volume at a thin margin, admits Reddy. Enerfra would continue to respond to market needs, but retain its focus on quality and transparency, commits Reddy.