Budget 2019 India: For example, the two programmes that I just mentioned, UDAY and Saubhagya, came outside the Budget. However, Budget 2019 can surely indicate is a direction that the government is planning.
Budget 2019-20: Ahead of Budget 2019, Sambitosh Mohapatra – Partner and Leader Energy & Utilities, PwC India highlights the biggest challenges for the power sector and the second phase of reforms needed to ensure affordable, 24*7 power for all by 2022. Edited excerpts of interaction with Financial Express Online:
What are the biggest challenges for the power sector right now?
I see the power sector challenges in two buckets. First one is making available quality and reliable supply for customers. The Pradhan Mantri Sahaj Bijli Har Ghar Yojana –“Saubhagya” ensured that over the last three years we could connect up to 30 million customers to the grid who never had access to energy. Now the issue with the utilities is to provide each of these customers with quality and reliable power supply and which is obviously affordable. The government can focus on resolving the stressed assets of the sector. The power, which will come on the grid at competitive rates, can be provided to these 30 million customers. By 2022, 24*7 the reliable and quality power would be a possibility.
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The second challenge is the preparedness of the utilities for managing the energy transition that will happen. Today the distribution utilities are literally in a monopolistic situation. They serve up to 95 per cent of the Indian customers. There is no competition and the customer doesn’t have a choice. These utilities need to transform themselves. While Ujwal DISCOM Assurance Yojana (UDAY) was the first step towards transforming the utilities, going forward these utilities need to attract talent, embed technology in their solutions and disrupt their business models.
What can Budget 2019 do to address these concerns?
This government has not limited itself to the Budget to make announcements. For example, the two programmes that I just mentioned, UDAY and Saubhagya, came outside the Budget. However, Budget 2019 can surely indicate is a direction that the government is planning. I would personally like to see the Budget 2019 talking about the amendment to the Act. Secondly, I want Budget 2019 to focus on the investment needed, the support that it should provide to the state utilities and state governments around the network investments that are required. This is because the renewables are also coming on to the grid.
What are the 2-3 steps that the government can take for the power sector?
The government needs to ensure that there is competition in the value chain. The generation has been delicensed and there is some competition in transmission. But, the next stage of reforms is ensuring that the distribution and retail supply business are segregated. Allow private participants to join in the value chain to add value. The traditional utilities may not be the competition which will come in. It would be the disruptors on technologies. If you look at the utility business, there are four models.
1. Aggregated model which is the integrated model
2. Networks
3. Supply business
4. Production services
In India you will see either it is integrated or network business. The two elements which need to be focused on by the private sector are products and services and around retail-supply, customer engagement. The amendment to the Act clearly mentions that renewable companies would not require a supply license to supply to the customer. That would be a breakthrough because then large renewable global players will a play in the Indian power sector by setting up infrastructure and getting direct access to customers. I would like to see is embedment of technology into business processes over the next two to three years.
PM Modi wants to build ‘New India’. Your out-of-the-box idea for Budget 2019?
We have seen convergence happening across four sectors of energy; mobility, telecom and home-automation. What this ensures is that it provides an integrated platform for the sector players of each of these sectors to look at options to grow their business. It will provide competition and choice to customers. The government can set up a committee or task force to think of how this platform can be leveraged to transform these loss-making utilities which are owned by state governments to profit-making entities where shareholder value is also enhanced. It will also provide a fantastic option for customers to have a choice and change their sourcing for each of their needs from the sector.
Source: financialexpress
