Rs 10,000 CRORE PUSH FROM STATES TO POWER IT FIRMS

Utpal Bhaskar and Regina Anthony, New Delhi
Mint

India’s state-owned power utilities are getting computer-savvy and will place, before March 2009, orders for Rs10,000 crore of software that can help them manage their distribution networks better.

The size of the order, the largest to be placed by power utilities, is likely to come as welcome news for software firms, both local and global, that are gearing up for a short-term slowing of business on account of the recession in the US, the largest market for software.

The software initiative is part of the government’s Accelerated Power Development Reform Programme (APDRP), which aims to improve power distribution systems across the country. “The tenders for the (systems that allow) IT-based electricity flow (and) accounting and auditing software will be awarded within this financial year (2008-09),” said a Union power ministry official who did not want to be named. The power ministry will fund state governments, which, in turn, will get their distribution utilities to place orders for the software.

Power shortages due to limited generation capacity and growing electricity theft have been identified as one of the key infrastructure bottlenecks threatening India’s ability to sustain an economic growth rate of more than 8 percent. Around 34 percent of power generated in India continues to be lost due to theft and pilferage. The country has an installed capacity of 141,000MW.

APDRP was created for upgrading distribution systems, minimizing transmission and distribution losses, improving metering, and assigning responsibility for realization of user charges. The scheme has been a failure and did not meet the deadline of 2007 for reducing transmission and distribution losses to 15 percent as envisaged in 2000-01 when it was conceived.

“We had a meeting with leading IT and software vendors through the aegis of Nasscom (India’s software lobby group). Firms such as Infosys Technologies Ltd, Tata Consultancy Services Ltd (TCS), International Business Machines Corp. (IBM) and Satyam Computer Services Ltd have evinced interest. We will shortly be taking the proposal to the cabinet for clearance,” the power ministry official added.

Spokespersons for IBM and TCS declined comment. “The power sector is opening up and IT can play a major role in bringing about standardization, transparency, revenue realization and transmission and distribution losses in the sector. Technology innovation can only benefit the sector,” said Ranjan Tayal, head, India region, Satyam Computer Services.

The Rs 10,000 crore given by the Centre to the states will initially be treated as a loan. After the states introduce IT-based electricity flow (essentially power supply through distribution networks managed and monitored through computers), and accounting and auditing software, the loan will be converted into a grant in phases based on targets in terms of reduction in transmission and distribution losses.