​India’s Power Sector Facing Annual Losses Of $27 Billion By 2017: World Bank

The power sector of the sub-continent will be facing annual losses of $27 billion by 2017, according to a World Bank estimate. The organisation also suggested that electricity distribution in India would require sweeping reforms to tackle inefficient subsidies, theft and political meddling in utility companies.

New Prime Minister Narendra Modi has pledged to bring electricity to the 300 million Indians who have to do without electricity. He has also promised to improve the reliability of supplies, one of the biggest complaints of companies doing business in the country.

Incidentally, large parts of northern India is suffering from severe power cuts this summer. With the mercury rising, there is a huge jump in demand that suppliers and an antiquated transmission system failed to meet.

Despite the gains made in the past decade when 280 million Indians gained access to electricity, India would struggle to make further progress unless it gives its utilities the freedom to improve their performance, the World Bank said.

These State-owned companies should be able to raise tariffs in line with their costs and receive more compensation for the subsidies they provide to rural users, the World Bank noted. Companies should also improve their accountability to regulators and consumers, it added.

Onno Ruhl, World Bank’s country director in India, said, "Two decades after the initiation of reforms, an inefficient, loss-making distribution segment and inadequate and unreliable power supply are major constraints to India's aspirations for growth.

"Revitalising the power sector by improving the performance of distribution utilities and ensuring that players in the sector are subjected to financial discipline is the need of the hour," he added.

By tackling the losses through a focused approach, it should be possible to make a marked difference in sector performance, the report concluded.