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RGGVY: A review is in order

  • Mr Saurabh
  • 5 September 2011
  • The Financial Express

Rural electrification has largely been a neglected area for distribution utilities. In 2005, an estimated 1.15 lakh villages were non-electrified. About 56.5% of rural households lacked access to reliable power supply. The situation clearly warranted immediate attention. Thus, during the 10th Five-Year Plan, in 2005, the Centre introduced its flagship programme, Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), aiming to give 'electricity to all' by 2009 (later revised to 2012).

The programme envisaged (i) creation of distribution backbone (at least one 33/11 or 66/11 kV substation in each block) (ii) creation of village electrification infrastructure, or VEI, that is, distribution transformers of adequate capacity, and (iii) free connection to BPL households. The Centre agreed to provide 90% of the total capital cost as subsidy. The balance was to be channelised through the Rural Electrification Corporation as soft loan. Further, appointing franchisee for managing the distribution business was made mandatory.

In many states, VEI are being created only to meet the demand of beneficiary BPL families. Clearly this arrangement appears good under the constrained resources (subsidy) available for the programme. However, the arrangement increases pressure on the newly developed system due to theft, leading to higher transformer burn cases. Instead of accounting only BPL beneficiaries, a load network should be developed, factoring in existing and projected load growth of the village. This will ensure that the network implemented has the capacity to meet the quality of supply.

Theft of newly developed infrastructure is also a major concern in some states. Involvement of local community, through some institutional changes in the present programme format, may be helpful in overcoming the problem of frequent theft of the distribution network.

The energisation of network and supply of electricity is to be ensured by distribution utilities, most of which are still state government enterprises with poor financial health. Further, the revenue sustainability is to be ensured by having franchisees at the village level.

Half-hearted efforts on franchisee implementation have aggravated the manpower problems of utilities. While some states have failed to institutionalise the system of franchisee, others opted for a basic model of franchisee (revenue-based collection franchisee responsible for billing and collection on behalf of utility.) The mechanism adopted by various states for institutionalising franchisees needs a re-look. Franchisees are important for revenue sustainability and better consumer services.

Development and management of the distribution network will be meaningless without electricity supply. Rural areas are the first to face power cuts in a shortage situation. So it is important to install decentralised distributed generation (DDG) plants at a rapid rate in rural areas. Efforts to exhaust the present R540-crore corpus earmarked for DDG development haven't made much impact. The existing DDG guidelines can be revamped to make it more business-friendly.

Tags: rural development, RGGVY, power to all, distributed generation, BPL families

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