J&K’s Smart Meter Debate: Dilemmas of reform and welfare state

3 September 2023

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Srinagar, Aug 3: Jammu & Kashmir’s recent transition to pre-paid ‘smart meters’ for power supply has taken a large section of consumers by surprise.

While voices of opposition in Kashmir region have been largely low key, Jammu region has vocally voiced its disapproval for the move. Several political parties and civil society groups, including Jammu Bar Council and Jammu Chamber of Commerce, have lent their support to the agitating communities. Government’s position so far is that J&K has a huge power debt of Rs 31,000 crore, and overall losses in the system are 55%, so improving revenue is inevitable.

The bone of contention

Fundamentally, it is a tussle between a crucial public reform and the imperatives of a welfare state, wherein the state is expected to provide subsidised and affordable basic services to its people.

J&K Government’s Principal Secretary, Power Development, H Rajesh Prasad, while addressing a press conference on the matter on August 31st in Jammu said that J&K was currently suffering from 55% Aggregate Technical and Commercial (AT&C) losses, which were the highest in the country. He also said that, so far, only 50% metering of consumers had been achieved, meaning the rest of the 50% was consuming power largely on fixed rates and without usage accountability. He also said that without minimising the losses and the revenue deficit J&K will not be able to get funding from the centre for modernising its power infrastructure.

The advocates of the removal of smart meters, on the other hand, maintain that as a welfare state, the J&K government has a responsibility to provide its citizens with essential services, such as power, at an affordable price. They also hold that subsidized power is a lifeline for the poor and vulnerable.

Current state of power sector in J&K

As per the Power Department official data accessed by Ziraat Times, J&K’s total installed power generation capacity is 3,607 MW. However, this is reduced by two-thirds in winter months, making the state purchase power from the national grid. While the power plants owned and operated by JKSPDCL have a total installed capacity of 1211.46 MW, the power plants owned and operated by NHPC in J&K produce 2339 MW. The Power Plants owned and operated by Independent Power Producers (IPPs) produce 57.5 MW.

J&K’s Power Development Department (JKPDD) has undertaken a major corporatisation initiative in recent years by creating four separate corporations for power development, distribution and transmission. It is these corporations that are mainly driving the reform agenda.The mother corporation of J&K Power Corporation Limited (JKPCL) administers J&K State Power Development Corporation Limited (JKSPDCL), which is responsible for power development in J&K. While J&K Power Transmission Corporation Limited (JKPTCL) is vested with the responsibility of taking care of transmission issues. Kashmir Power Distribution Corporation Limited (KPDCL) and Jammu Power Distribution Corporation Limited (JPDCL) manage power distribution issues in the respective regions. These corporations are responsible for implementing a power reforms agenda that the PDD says is driven by financial sustainability.

The employees of the department and those under the corporations believe that the reforms are necessary to make the sector viable, Presently, job security and career growth of many Power Department engineers and employees are at risk due to the department’s financial losses.

Arguments and counter-arguments on structural reform

There are two main schools of thought on how to address this issue. One side supports reforms in the power sector to cut waste and revenue deficit. They believe that subsidized power is a drain on the state’s finances and that the J&K government was already facing a revenue deficit and debt problem, with subsidized power making it only worse.

The advocates of smart pre-paid meters maintain that it is a measure of preventing power pilferage and waste, which could ultimately help J&K to bridge its revenue losses. They also hold that the power tariff in J&K is one of the lowest in the country, which discourages people from conserving power and leads to higher power losses.

The other side thinks that, as a welfare state, the government has a responsibility to provide its citizens with essential services, such as power, at an affordable price. Subsidized power is a lifeline for the poor and vulnerable as they cannot afford to pay the full cost of power, they believe.

What is the present status of the reforms?

The J&K government has been taking multiple steps to bring in reforms in its power sector. It has introduced pre-paid meters and smart meters to improve revenue collection, besides investing in new projects to increase generation capacity. It has also invested heavily in the last 20 years in improving the efficiency of transmission and distribution. While the government is currently considering both sides of the argument and is yet to take a final decision, observers believe that there has to be a middle path – while cutting waste and pilferage are important, power has to be affordable to economically weaker sections as well.