High Technical and Commercial Losses
The power distribution sector suffers from extremely high aggregate technical and commercial losses (AT & C), which range up to 60%. This is a matter of grave concern as it amounts to a revenue loss of $ 6 billion annually that is equivalent to 2%. These losses have historically doubled every 3 years and are twice of what our country spends on health and half of the total expenditure on education. Any solution that addresses the problem of profitability of the sector must target the issue of T&D losses.
Some purpose for technical and commercial losses is summarized in Figure.
Figure: Main Factors Underlying Technical and Commercial Losses
It should be probable to bring down the technical losses in the distribution system to the level of 9% by undertaking appropriate system- improvement schemes. Therefore, this has not been possible for want of adequate funds, perseverance and professional development of the staff concerned. Unless these losses are decreased to acceptable levels, the power industry cannot become financially viable and turn itself around.
The commercial losses of distribution utilities are likely to increase from Rs. 400 crore in 1991-92 to Rs. 24,000 crore (projected) in 2006-07. These are mainly because of theft and pilferage, low metering efficiency, inefficient billing and inadequate revenue collection. The common thread running by these aspects is lack of sensitivity and a sense of belongingness to the system.
You will learn about this issue in detail. Here we will briefly outline the main concerns.