Framing a blueprint for the turnaround of power sector in Jammu and Kashmir
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The several operational inefficiencies and the large revenue gaps in the power sector of Jammu and Kashmir have hampered the financial stability of the sector. Following which, the Power Development Department, Government of Jammu and Kashmir commissioned TERI to carry out an assessment of technical and financial performance of the power sector in the state in 2009, which is characterized by operational inefficiencies and develop a roadmap for turnaround.
In order to bring out the factors responsible for the financial instability in the sector, TERI has prepared an assessment report of the technical and financial performance of the sector suggesting a loss reduction strategy so as to turnaround the power sector of the state and make it self sustainable.
Based on the TERI assessment report, it was revealed that the most critical area that is hampering the financial sustainability of the sector is the high level of prevailing AT&C losses and other factors such as widening gap between average tariff and cost of supply, poor infrastructure, etc. Further, it is stressed that the current level of T&D loss in the state stands at 61.31% for the year 2008?09 is the highest in the country. While the non-technical loss accounts for a significant share in the total T&D losses, the current revenue gap in the power sector is nearly two-thirds of the total tax revenue collected by the State.
The current scenario created an imperative need to establish and develop a viable industry in the state and reduce budgetary burden of the government (both state and central). Thus, firstly a detailed study of the existing efficiency levels achieved by PDD with regard to T&D losses, AT&C losses, collection efficiency, etc., was carried out.
Based on the current assessment of the losses, discussions with officials of PDD and experience of other states in India, a pragmatic loss reduction strategy was proposed for future so as to turnaround the power sector of the state and make it self sustainable.
A three-pronged approach was suggested which included (i) legislative measures such as enactment of a forward looking Act similar to the Electricity Act, 2003 and the Energy Conservation 2001; (ii) administrative reforms such as reorganization and improvement of governance, capacity building of JKPDD professionals; and (iii) suitable subventions aimed at technological improvements, improvement in system performance and reliability, and upgrading human resources. Priority areas have been identified along with appropriate implementation strategies including annual plan of action and capital expenditure.
Subsequently, the key findings were presented to the Chief Minister of Jammu and Kashmir, Commissioner, Secretaries from Power, Revenue and Planning departments, and senior officials from the planning commission and Ministry of Finance, GoI.
In order to bring out the factors responsible for the financial instability in the sector, TERI has prepared an assessment report of the technical and financial performance of the sector suggesting a loss reduction strategy so as to turnaround the power sector of the state and make it self sustainable.
Based on the TERI assessment report, it was revealed that the most critical area that is hampering the financial sustainability of the sector is the high level of prevailing AT&C losses and other factors such as widening gap between average tariff and cost of supply, poor infrastructure, etc. Further, it is stressed that the current level of T&D loss in the state stands at 61.31% for the year 2008?09 is the highest in the country. While the non-technical loss accounts for a significant share in the total T&D losses, the current revenue gap in the power sector is nearly two-thirds of the total tax revenue collected by the State.
The current scenario created an imperative need to establish and develop a viable industry in the state and reduce budgetary burden of the government (both state and central). Thus, firstly a detailed study of the existing efficiency levels achieved by PDD with regard to T&D losses, AT&C losses, collection efficiency, etc., was carried out.
Based on the current assessment of the losses, discussions with officials of PDD and experience of other states in India, a pragmatic loss reduction strategy was proposed for future so as to turnaround the power sector of the state and make it self sustainable.
A three-pronged approach was suggested which included (i) legislative measures such as enactment of a forward looking Act similar to the Electricity Act, 2003 and the Energy Conservation 2001; (ii) administrative reforms such as reorganization and improvement of governance, capacity building of JKPDD professionals; and (iii) suitable subventions aimed at technological improvements, improvement in system performance and reliability, and upgrading human resources. Priority areas have been identified along with appropriate implementation strategies including annual plan of action and capital expenditure.
Subsequently, the key findings were presented to the Chief Minister of Jammu and Kashmir, Commissioner, Secretaries from Power, Revenue and Planning departments, and senior officials from the planning commission and Ministry of Finance, GoI.