Ensuring Improved Electricity Services for a Viksit Assam

Dr Debajit Palit

(debajit.palit@crfindia.org)

 Access to modern energy services is a cornerstone of development, facilitating improvements in human well-being. Numerous empirical studies have demonstrated the extensive benefits of enhanced electricity access and reliability, including income and employment generation, gender equality, health, education, and empowerment. This strong correlation between electricity and development has led to sustained global efforts in expanding sustainable energy access initiatives and its inclusion as a Sustainable Development Goal (SDG 7).

Status of electrification in India

India has long recognised the importance of electricity for economic growth, as reflected in the five-year plans. With concerted efforts by the central and different state governments, India achieved complete village-level electrification and near-universal household electrification in 2019. However, near-universal electrification has not translated into 24x7 electricity services for most rural households and businesses. With the per capita electricity consumption at approximately 1300 kWh, India lags the global average of about 3200 kWh. Though India has set an ambitious goal to provide 24×7 electricity services across the country by March 2025, it might be difficult to achieve. Recently, the Ministry of Power has sought an extension for the Revamped Distribution Sector Scheme by two years to FY2027-28. The scheme aims to improve the operational efficiencies and ensure financial sustainability of the distribution sector.

Progress in Assam

By early 2016, Assam had around 35 lakh unelectrified rural households, which was a marginal reduction from 2000, reflecting slow progress in electrification. In 2001, the overall rural electrification rate in Assam was only 16% of households. However, under the central government electrification schemes, the state aggressively expanded electrification, achieving near-universal village and household electrification along with the rest of India.

Despite this achievement, the per capita electricity consumption in Assam continues to be low at less than 500 kWh. Another key concern is with respect to the operational efficiency of the electricity distribution sector and provision of reliable electricity services on a continued basis. In the recently released 13th Integrated Rating & Ranking of the Power Distribution Utilities in India, the Assam state electricity distribution company (discom) has got an “A” grade and has been ranked 14th (out of 52 power distribution utilities assessed). Though it is an improvement from last year (B-), in 2023, the state had got an “A” rating, indicating that the state discom has not been consistent in its performance. On the other hand, private discoms like Adani Electricity and Tata Power and state discoms in Gujarat, Kerala and Haryana have consistently maintained their higher performance during the last 3 years.

Furthermore, Assam has the risk of power shortages with less than 20% of electricity coming from self-generation. The balance of 80% is procured from the central sector or through short-term purchases. The demand for power in the state is also increasing substantially at more than 9% per year with an increase in commercial and industrial consumption, though there has been no commensurate increase in self-generation. A recently released report on resource adequacy by the Central Electricity Authority indicates that the contracted capacity (present and planned) by the state discom might be unable to meet the demand in 2034-35, especially during the months from July to September. The report further states that Assam is likely to witness an energy deficit ranging from 5 MUs to 3519 MUs in different years from 2024-25 to 2034-35. Though the state government is focusing on solar power and a total of 3,000 MW are in the pipeline to meet the increasing demand, it is important to note that the actual output in terms of energy from solar in Assam will be one-fifth of the equivalent hydro or thermal capacity because of the intermittency of solar. It would thus be imperative to also focus on other technologies, including coal and hydro, so that adequacy of power supply is ensured and there is no deficit in the future.

On a positive side, the aggregate technical and commercial losses have been consistently reducing from a high of 17% in 2021-22 to 14% in 2023-24. However, it is higher than some of the better-managed state discoms (such as in Gujarat, Haryana & Kerala) and private sector utilities with losses at less than 10%. What is concerning is that the state utility has not been able to undertake complete distribution-level metering, as reflected in the Distribution Utilities Ranking Report 2023-24, which may again increase the losses unless the metering work is completed. Furthermore, though the discom has shown an earning of Rs 0.24/kWh for every unit of electricity sold in 2023-24, the challenge is the consistency. The discom had shown a positive revenue of Rs 0.52/kWh in 2021-22 but an anabove average loss of Rs 0.61/kWh in 2022-23.

The Task at Hand

The critical challenge for the state is ensuring an adequate, reliable and affordable electricity supply to all households and businesses. Another sector where the state must focus is converting the diesel pumps, roughly 100,000 of them, to electrical pumps, especially solar. The agriculture sector accounts for less than 1% of the electricity consumption in Assam. The annual cost incurred for a diesel pump by a farmer is substantially higher than an electrical or solar pump. However, the state has yet to install any pump under the PM KUSUM scheme, though the central government has sanctioned 4000 solar pumps. Studies indicate that farmers using electricity-powered irrigation achieve almost 24% higher crop yields than those relying on diesel pumps.

Structural reforms and learning from best practices to enhance the discom’s operational efficiency are essential for continuing to deliver a high-quality service. In fact, the state discom got a lower rating in terms of fault rectification and grievance redressal in the Consumer Service Rating of discoms, though overall the rating is good. Transitioning from an administrative model to a more business-orientated, customer-centric approach is vital to improve customer satisfaction. The reforms must also incorporate extensive capacity-building initiatives, particularly in change management.

Furthermore, involving the private sector, as evidenced by successful models in states like Odisha and cities like Agra, Noida, Delhi, and Mumbai, can significantly enhance operational efficiency and service delivery and ensure better customer satisfaction. To address the fear of cherry-picking of high-return urban areas by private utilities or an increase in electricity prices, the models, either private or public-private partnerships, can be structured such that both rural and urban areas are covered and stringent performance benchmarks are set by the electricity regulator. Technology can play a vital role in improving operational management and network maintenance, extending beyond just smart metering to advanced digital solutions.

To drive rural economic growth, social development, and employment generation, sustainable electrification is imperative. This requires meticulous planning, considering social and economic dynamics, followed by effective execution within a defined timeframe. By ensuring the availability of reliable electricity, Assam can unlock its full development potential towards Viksit Assam, fostering inclusive growth and improving the quality of life for its people.

(Dr Debajit Palit is Centre Head, Centre for Climate Change & Energy Transition at Chintan Research Foundation, New Delhi. Views are personal.)