Do we want to become like Sri Lanka? Power minister questions freebie culture

Power Minister Raj Kumar Singh said that banks in India were reluctant to fund any new power project as in the past, financial institutions have lost close to Rs 60,000 crore to Rs 70,000 crore on many power generation companies, and no money was coming to the power sector. Speaking at BT's India@100 summit in New Delhi, the minister said the states, like Delhi, that are promising free electricity can create a huge crisis. He said that nothing is free, and electricity cannot be free. He said that India might go the Sri Lanka way because of the freebies as subsequently, it will mount pressure on succeeding generations who will have to pay for the outstanding payments.

“No electricity is free. Either the taxpayer is paying for it or someone else is. I want to ask the minister (chief ministers), who is paying for the freebies? Succeeding generations will have to pay for it. Do we want to become like Sri Lanka,” asked Singh.  

He further added that for India’s growth story to continue, investments should come to the power sector. "We have put the systems in places, whereby if discoms don't pay bills, their access to exchanges gets cut off," said the minister. This would imply that there will be no defaults or pending bills.  

He added that states should understand and take responsibility for their energy requirements. “Whatever loans have been taken, these loans have to be repaid,” Singh said. “For most of our states, the bulk of expenditure is repayment of loans.”

Talking about the renewable energy production in India, Singh said though the renewable energy rates have come down, the country has to add storage to use it well.

Earlier this month, the ministry proposed to create a central pool of renewable energy sources, from which intermediary companies can procure power and supply to a distribution company and retail supply to more than one state.  

According to news reports, the Centre is trying to create this pool which will be a collection of inter-state transmission systems (ISTS) connected to renewable sources, such as hydro, wind, solar, biomass, biofuel, biogas, etc.  

There will be an intermediary procurer, which will be a company that will purchase electricity from generating companies and resell it to an end procurer.

These proposals are included in the draft Electricity (Amendment) Rules, 2022. The ministry has asked the stakeholders to share their comments by September 11, 2022.