Performance of the power sector, as per the Survey, continues to stage a downtrend despite significant reforms in the sector such as setting up of regulatory authorities at the centre and state level and opening generation to private investment.

The Survey has noted that owing to the high risks involved in non-payment of dues by financially weak SEBs, private investors have been shying away from making investments in the sector.

Laying special thrust on low-cost power, the Survey has called for rationalisation of the present system of tariff setting.

In a significant observation, the Survey has noted that pricing of power at (efficient) cost of production is not just a fiscal necessity but essential for keeping the system from collapsing. Transmission and distribution (T&D) losses need to be tackled immediately in order to make efficient pricing feasible.

The Survey has, however, remained silent on the problems being faced in implementing the mega power projects, which were to generate power at lowest possible tariffs.

The Survey has projected, the gross subsidy in the power sector for 2001-02, on account of sale of electricity to agriculture and domestic sector besides the inter state sales, to go upto Rs 41,238 crore as against Rs 36,319 crore during 2000-01.

As per the Survey, there is a continuing deterioration in the financial performance of SEBs. Inability of SEBs to pay their dues is also affecting the finances and new investment plans of the central PSUs. Managerial and financial inefficiencies in state sector utilities have adversly affected capacity additions and systems improvement.

While the SEBs do not have enough resources to finance future programmes, they are also unable to raise investible funds from alternative sources due to their poor financial and commercial performance, says the Survey.

The Survey has observed that adoption of the Electricity Bill by various state government's will help in enabling reform of SEBs.

The captive power generation, as per the Survey also needs to be encouraged to reduce the gap between demand and supply. With appropriate policies and institutional arrangements, power generated by such captive plants could be optimally utilised.

The capacity addition in the power sector, as per the Survey, has also fallen short of targets. As against a target of 2225 mw during April-October 2000, the actual capacity addition stands at 2175 mw. The installed capacity as on December 31, 2000 has crossed one lakh mega watts.

Commenting on the private sector power projects, the Survey has observed that only one project of 330 mw capacity has been accorded techno-economic clearance by the Central Electricity Authority (CEA). During this fiscal, two projects for 378 mw capacity have been commissioned.