Challenges in the Indian power sector

Power sector is critical to the overall development of an economy. It provides basic infrastructure to industries in all the sectors and helps in achieving a sustainable economic development. The Indian power sector is confronted with several challenges in various areas of activities. We can study these challenges well into the following categories:

Production-related challenges in the Indian power sector

  1. Availability of fuel: Indian power industry is one of the most diversified ones in the world as far as sources of power generation are concerned. Both commercial and conventional sources of fuel are utilized. Around 55% of the total power generation in India is coal based but supply of coal is much below the quantity demanded by the power industry. There are delays also in the supply of coal posing major challenge to power sector. Natural gas which counts to around 10% of fuel in power generation also exist in deficit as compared to its demand.
  2. Environmental concerns: The increasing awareness on environment has made achieving environmental clearances an even difficult job for power-sector firms. There are a number of clearances required to be obtained from different authorities including Department of Forests and other Government bodies delaying the whole production process.
  3. Difficulties in land acquisition: Land acquisition in another major challenge confronting the power sector. Land availability is limited and the increasing demands for power in the country worsen the situation.

Price-related challenges in the Indian power sector

  1. Theft of electricity: Theft of electricity is a common scenario in India. According to a recent study by NDTV, around 40% of the electricity in India is unpaid. People steal power especially when they need in bulk like on festivals and occasions. Moreover, a large number of the rural households lack proper meters which further promotes abuse of electricity.
  2. Expensive fuel: Most of the power generated in India is coal-based but the domestic supply of coal is insufficient. This compels the companies in power sector to import coal leading to a rise in per unit costs of electricity here.
  3. Transmission & distribution losses: The transmission & distribution (T&D) losses are vast in the Indian power sector. There are unplanned extensions of power lines in the country as well as overloading of system elements like transformers and conductors.
  4. Populist pricing: Indian power industry also suffers from political and bureaucratic selfishness. Free power supply or highly subsidized power supply to the agricultural population in India has always been an important strategy for securing votes during elections. The rising power generation costs along with the inability to charge equivalent prices lead the power sector companies to heavy losses.

People-related challenges in the Indian power sector

  1. Long Learning curve: The learning curve in the power sector is quite long as it takes time for an employee here to become an expert. The employees need to devote lot of time in a single job profile so as to be able to do it with precision.
  2. Difficulties in replacement: The people in this sector are mostly committed to their organization. Since it takes time to learn about a particular skill in power industry, the job rotation and replacements are hard to do.
  3. Re-orientation of employees: The power sector is characterized by aging population and it is difficult to train such people according to changing market environments. These employees are usually not very receptive to new ideas.

 References

Ankita Agarwal

Analyst at Project Guru
Ankita is working with the editorial board of Project Guru as a Research Analyst and Writer. With Masters in Commerce and Business Studies, Ankita learned much of what she knows about management through experience. She has previously worked in various financial institutions like Birla Global, HDFC Ltd. and Citi Financial. She is self-motivated and writes for the Knowledge Tank section of Project Guru. She has authored more than 80 articles so far in Human Resources Management, Strategic Management, Finance and Marketing. She likes to pen her thoughts about the latest issues gripping these areas across the world.
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