In power sector reform in the country, Odisha occupies a prominent place as the first state to implement reforms with support from the World Bank in early nineties under Odisha Power Sector Reforms Project. Odisha is the first state to introduce a regulatory framework in power sector with establishment of OERC in 1996. Since then Odisha has made strides in its power sector, transitioning from a power-deficient to a power-sufficient state, and even aiming to become a model in the electricity sector. However, it still faces several significant challenges, particularly in the areas of distribution, infrastructure, and the social and environmental impacts of its energy policies.
Here are some of the key problems in state’s electricity sector:
1.Distribution and Infrastructure Issues: In spite of self-sufficiency in power generation there is experience of Frequent Power Outages and Low Voltage in many parts of the state. Many localities, including parts of major cities like Bhubaneswar, experience persistent unscheduled power cuts and low voltage issues round the year. This is often attributed to inadequate and aging electrical infrastructure. Besides, the state has high Aggregate Technical and Commercial (AT&C) Losses even after thirty years of the reform programme. While AT&C losses have significantly reduced over the years from 50% to a targeted 15%, they remain a major concern. A substantial portion of these losses is due to electricity theft and the dilapidated distribution network. Added to this the old and dilapidated network adds to the woes of the consumers. The distribution network in many areas is old and in poor condition, characterized by undersized, worn-out conductors, damaged poles, poor joints, and compromised safety clearances. This leads to frequent breakdowns and poor service quality.
2. Rural Electrification Challenges: While village electrification is high, connecting all households, particularly in small rural villages, remains a challenge due to factors like complex connection procedures, high connection fees, and the perceived poor quality of service.
3. Disaster Vulnerability: Odisha is prone to cyclones almost every alternative year , which frequently cause significant damage to the power infrastructure, leading to prolonged outages and substantial maintenance costs. Under ground cabling is the only option but it is very expensive. Of course the State Government has selectively started underground cabling in parts of Bhubaneswar but it has to cover the entire stretch of the coastal districts and Government of India needs to come forward to extend assistance in this regard.
4. Billing and Collection Inefficiencies: Despite the privatization of distribution companies, there are still issues with billing and collection efficiency, contributing to the financial strain of the DISCOMs. After Tata Power takeover of the distribution companies in the state there’s substantial improvement in this respect but there’s still scope for improvement particularly in rural areas.
5. Consumer Dissatisfaction: Consumers often complain about poor service quality, slow response from staff, wrong billing, and fluctuating voltage. This has to be addressed promptly.
Financial and Operational Challenges: Historically, distribution companies have faced financial strain due to a gap between the average revenue realized and the average cost of supply, inadequate tariffs to cover costs, and issues with revenue collection.
Moreover, power theft at various levels, sometimes with the connivance of employees, is a significant contributor to losses and undermines the financial viability of the distribution companies. Besides, there has been a lack of social support for some reforms, with instances of organised protests against initiatives like prepaid smart meters, particularly from farmer communities.
It’s a matter of concern that subsidy levels for agricultural and domestic consumers have historically contributed to the weak financial conditions of the utilities, and ensuring tariffs reflect actual costs remains a challenge.
Environmental and Social Concerns: While Odisha is pushing for renewable energy, its power portfolio is still heavily reliant on thermal power generation. This contributes to high per capita greenhouse gas emissions and local air and water pollution. We have to gradually increase green energy mix in our generation system with global standards. Communities in coal-mining regions and near thermal power plants often bear the brunt of environmental degradation, including polluted air and water, loss of productive land, and insufficient compensation or rehabilitation. This is a major cause of concern.
While ambitious renewable energy targets are set, issues like insufficient compensation through the Land Bank system for land acquisition and the specialized nature of new renewable energy jobs can create social unrest and complicate the transition for former coal employees. Floating solar projects also face maintenance and weather-related risks. Rooftop solar projects can be a good option with subsidies from Government of India and the State Government which should be encouraged on mission mode.
Ongoing Efforts and Future Outlook:
The Odisha government has undertaken significant reforms, including the privatisation of distribution to Tata Power, which aims to improve billing and collection efficiency, roll out smart meters, and reduce losses. There are also plans to strengthen transmission infrastructure, establish new grid substations, and increase the share of non-fossil fuel sources in the energy mix. However, addressing the long-standing issues of infrastructure gaps, power theft, and ensuring equitable development for communities affected by energy projects remains crucial for the sustainable growth of state’s electricity sector.