Power ministry seeks to take away sub-transmission from discoms

The Ministry of Power has suggested that the 33 kV system be handed over from discoms to the STUs for better planning, loss reduction and increased supply reliability.
Looking to overhaul the last-mile power transmission system in states, the Union ministry of power has issued an advisory that 33kV power systems should come under state transmissions utilities (STUs) and not power distribution companies (discoms).


It has also suggested that if states are unable to provide financial assistance to STUs, the 33kV system should be transferred to a joint venture headed by Power Grid Corporation of India (PGCIL).


The move comes at a time when states are already protesting against the Centre for allegedly breaching their rights through amendments to the Electricity Act, 2003. During the last Parliament session, several states said the Centre is breaching their rights, citing the federal structure of the electricity sector, wherein generation and transmission come under the Centre while distribution is state subject.


According to the Union ministry of power, the 33kV system incurs losses. The 33kV or sub-transmission system is the bridge between the Centre and state power grid. The operational loss at 33 kV is about 4.8 per cent, while the loss at the 66 kV-220 kV level is 1.72-2.39 per cent, according to a committee of the Union ministry of power. It said the yearly availability at 33 kV is about 96.3 per cent while for 66 kV-220 kV, it is 98.5-99.4 per cent.


The ministry constituted a committee under the chairman and managing director of PGCIL with representation from the Central Electricity Authority (CEA), STUs of Haryana, Maharashtra and Odisha and the Central Transmission Utility of India (CTU) to suggest measures to reduce losses at the 33kV level.


The committee said there was a “considerable scope for improvement” of performance of the 33 kV system, which is presently maintained by discoms, in terms of reduction of losses  and improvement in availability of network.


“The distribution system is an end-consumer facing entity. The focus of discoms is generally on quick restoration of supply in case of any fault or granting connection to new consumers, rather than on long-term planning and expansion of the distribution network,” said the committee in its report.


According to the calculations by the ministry of power, better upkeep of the 33 kV system would lead to an incremental revenue of Rs 7,865 crore annually.


The ministry of power has suggested that the 33 kV system should be handed over from discoms to the STUs for better planning, loss reduction and increased supply reliability. “State governments would need to provide financial assistance to STUs for modernising their 33 kV assets,” said the notice by the ministry.


“In the event, the state government is not in a position to provide financial assistance to STUs for upgradation, then the STU can form a JV with PGCIL on a 50:50 equity basis for mobilising their financial resources,” it said.


Experts warn that this step could backfire and also lead to a state-Centre tussle. A senior sector executive said, if 33kV goes away from discoms, the capital value will erode and also a revenue stream of open access consumers would also go away from the discoms.


“Shifting of the 33kV network to STUs, as proposed by the power ministry, lacks both legal and regulatory provisions. The entire premise of the order is the financial health of discoms, losses at 33kV and supply reliability, which is not a common feature in each state,” said power sector consultant Rajiv Goyal of Mercados Energy and former vice-president, NPCL, Greater Noida.


He added, “The solution may be adoption of tariff-based competitive bidding by discoms at 33kV as done by CTU and many STUs for improving the infrastructure by involving private companies,” Goyal said. 


A senior executive said many STUs were financially ailing and would be unable to take up the reforms suggested by the Centre. The power ministry, in its note, has outlined a series of reforms that STUs need to take for 33kv.

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