Estimating a 12 per cent peak power shortage in current fiscal, the Economic Survey on Monday portrayed a gloomy picture of the consequences, saying it could mean a loss of a whopping Rs 300,000 crore (Rs 3,000 billion) to the economy and sought quick remedies -- faster reforms, adequate fuel supply and suitable policy packages.
With peaking shortage of 12 per cent and average shortage of 8 per cent, the country lost 50 billion units or a massive Rs 15,000 crore (Rs 150 billion) in foregone generation alone during the current financial year, said the Economic Survey for 2005-06.
"The simplistic assumption of 5 per cent power-intensity of aggregate output in the economy yields a supply-multiplier of 20 and an associated GDP loss of Rs 300,000 crore," the survey, which was tabled in Parliament on Monday, said.
"Power scenario in the country continues to be a matter of concern," it said, adding that inadequate power availability adversely affects in a major way output of large industries, irrigation and production of small and medium enterprises.
Electricity generation during April-December 2005-06 grew by 4.7 per cent to 458.6 billion units. This was not only less than the annual target of 5.8 per cent but also lower than the 6.5 per cent growth achieved in the same period last fiscal.
The slowdown in generation was partly on account of coal and gas supply crunch, which resulted in a growth of only 1.4 per cent in thermal power generation.
Nuclear generation, on the other hand, rebound to achieve 7.2 per cent growth as against a negative growth of 7.2 per cent last fiscal while generation from hydroelectric projects grew by a strong 19.1 per cent so far this fiscal.
The Survey projected a dismal picture of state power sector's financial performance, as resources foregone through high losses and poor returns continued to be very large. The total commercial losses of state utilities are estimated at a huge Rs 22,569 crore (Rs 225.69 billion) with a negative rate of return of 26.13 per cent in 2005-06. This is, however, less than the losses of Rs 23,558 crore (Rs 235.58 billion) and a rate of return of a negative 31.94 per cent last fiscal.
Gross subsidy on sales to agriculture, domestic consumers and other states is projected to be Rs 35,632 crore (Rs 356.32 billion), slightly less than Rs 36,187 crore (Rs 361.87 billion) in 2004-05. The net subsidy after taking into account the payments from state governments stands at Rs 24,070 crore (Rs 240.70 billion) this fiscal.
The direct transfers from state governments to utilities was Rs 11,562 crore (Rs 115.62 billion) in 2005-06, but an uncovered subsidy of about Rs 16,000 crore (Rs 160 billion) remained, it said. This indicated the large potential that reforms have in improving the electricity sector and also the fiscal position of states.
The survey said about 34,000 MW generation capacity is likely to be added during the 10th plan period as against the original target of 41,110 MW and the mid-term appraisal target of 36,956 MW. Of this, 13,416 MW has already been added while the remaining 20,608 MW would be added during 2006-07.
Fuel supply has remained a major area of concern, the survey said, while observing that the coal and gas supplies would fall short of demand projections.
The demand for coal is likely to be about 365 million tonnes with the shortfall in supply about 31 million tonnes in 2006-07. Demand for gas is also outstripping supply and power stations are not getting adequate gas, the survey said.