Giving more people LPG connections among govt's energy reforms focus

Representative Image
Gas and electricity were two areas where voters felt the BJP had done well. The earlier government electrified 100 per cent of villages and 99 per cent of all households, completing the tail end of major electricity schemes that had been started decades ago. It achieved a similar feat with LPG, giving free connections to 71.9 million of 80 million eligible consumers. 

But future targets could be harder to meet. In electricity, the new Modi government will need to ensure a steady supply and robust infrastructure. In LPG, it has to increase the penetration of LPG connections and also ensure refills by the beneficiaries.

The Petroleum Ministry is looking at a mechanism for strengthening its energy access scheme, Pradhan Mantri Ujjwala Yojana Ujjwala (PMUY) which gave 71.9 million connections since 2016. It is belie­ved that free LPG connections were a major reason why rural women voted for the party. The target of the new government will be to reach the remaining eight million consumers in the coming 100 days. 

Under PMUY, LPG connections are being provided to poor families with a support of Rs 1,600 for each connection. Sources indicate that once 80 million connections have been delivered, the government plans to further ease the eligibility criteria so that 100 per cent LPG penetration can be achieved. India's LPG penetration stands at 94 per cent.

One major challenge, however, is the high number of people who do not refill the gas cylinder owing to the cost. The average annual refill by a PMUY consumer stood at 3.28 cylinders compared to seven cylinders by other consumers. The government claims that currently around 80 per cent of its consumers opt for refills.

In electricity, the government, having given electricity to more households, will focus on increasing efficiency in metering connections, ensuring a sturdy transmission network, a theft and error proof power distribution system, and efficient billing.  
Since a huge number of newly electrified citizens will qualify for subsidized power, government officials said tariff rationalisation should be enforced. The National Tariff Policy 2019-20 which was formulated before the country went to the polls in March,  needs to be approved and implemented now. 

The policy includes recommendations for states to rationalise their tariff structure by balancing subsidies while not adding to the burden of other consumers.

As the state-owned power distribution companies (discoms) seem to be slipping back into the red despite the debt restructuring scheme under UDAY, officials said smart metering, energy efficiency, and the right tariff mechanism will help discoms improve operations and financial status. 

Though the Narendra Modi government had already started work on these areas, the first 100 days will see an increased emphasis on making progress.  

If the government wants to improve access to more green power in the system, it will need a higher share of hydro power. A new policy for promoting hydro power, cleared by the outgoing Cabinet, awaits implementation. 

Officials said they will push to make finance available for hydro projects since hydro is key to balancing the grid given the intermittent nature of renewable energy. 

The hydro power sector saw almost stagnant growth in the past decade. The new policy aims to improve its share in the energy mix with a slew of financing solutions to help re-start languishing hydro projects.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel