India hopes to provide electricity to every home without polluting the environment. There has been a breakthrough with US firm SunEdison being a successful bidder in a government auction to set up 500 megawatts of solar power capacity in Andhra Pradesh. The firm made the lowest bid- Rs4.63 per kilowatt-hour. This is indeed good news. But a fall in solar power tariff is not enough to achieve the government’s objective. Reform in electricity distribution is a priority goal. During the last decade, huge investments were made in thermal power generation. But the remedy lies in removing the fault in distribution. Distribution companies are mostly owned by state governments and face acute financial difficulty. The NDA government has been in the last few months having talks with the state governments to provide them with yet another bailout for distribution companies. It is known that earlier bailouts have proved abortive. State governments are not willing to reform the distribution system for political reasons.
The NDA government has to set a high target for increasing the country’s solar power capacity. It has tried to rope in public sector companies to achieve its objective. NTPC has been called upon to bundle solar power with cheaper thermal power. The government has to take up a bailout scheme which will persuade state governments to carry out necessary reforms. 25% of power generated is lost in transmission. That has to be eliminated. The states will have to reduce the loss as much as possible and achieve 100% metering of power. They will no doubt show reluctance to fall in with the Centre’s move. But without a thorough reform of distribution of power, electricity for every home will remain just a dream.
