New Delhi: Credit rating agency Crisil has projected that total debt overhang of state power distribution utilities would rise to Rs 2.6 lakh crore soon. The debts of the distribution companies (discoms) have soared despite the much-heralded scheme to turn utility finances around, the Ujwal Discom Assurance Yojana, UDAY, which evidently has come a cropper. 

There is clear lack of political will to arrest runaway revenue leakage in distribution across states; the next government surely needs to show more political commitment on power sector reforms.

UDAY, launched with much fanfare in 2015-16, was supposed to wipe out losses of the discoms, clean up their balance sheets and make them financially sustainable. The states concerned have dutifully issued bonds totalling over Rs 2,32,000 crore for the purpose. 

And, yet, the aggregate technical and commercial (AT&C) losses of discoms have hardly come down, with the result that their outstanding debt levels are now reaching unsustainable proportions. It would worsen the quality of power nationally and stultify growth. 

The way forward is for the political class to walk the talk and implement long-pending distribution reforms. The political executive needs to garner the courage to levy reasonable user charges for power consumption, and not tamely curry favour with the electorate with open-ended giveaways that simply make no sense.

There may certainly be a case for limited subventions for power, budgeted and paid upfront. What is required is effective political consensus so that widespread political patronage for non-billing and open theft of electricity is summarily done away with. And, to begin with, prepaid metering for power needs to be the norm. AT&C losses any higher than in the low single digits need stemming.