Indian Express Explained 17/05/2020

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1)Explained: Why the govt had to inject money into the power sector:- Part of the Economic Package is 90,000-crore liquidity injection into power distribution companies (or discoms).

The move is aimed at helping the discoms clear their dues with gencos (or electricity generation companies), who in turn can clear their outstanding dues with suppliers, such as coal miners.

Why Was this needed:- The primary trigger is the poor financial condition and revenue collection abilities of most state discoms. This is despite several interventions, including a scheme called UDAY that was launched in 2015 to fix the problems of a sector where the upstream side (electricity generation) was drawing investments even as the downstream (distribution) side was leaking like a sieve.

Electricity Generation and Distribution Process can be understood in 3 Stages:-

First Stage :  Electricity is generated at thermal, hydro or renewable energy power plants operated either by Govt. (NTPC, NHPC) or Private ( Adani , tata).

Second stage: Electricity generated is then Transmitted using Complex system of Transformers etc ( Ex. Powergrid). Companies like Power System Operation Corporation (POSOCO) along with National, Regional and State Dispatch Centres (NLDC, RLDC, SLDC) work in tandem to ensure grid security and balance.

Third stage: This last mile link is where discoms come in, operated largely by state governments. However, in cities such as Delhi, Mumbai, Ahmedabad, and Kolkata, private entities own the entire distribution business or parts of it.

Why is there a Problem :- Discoms essentially purchase power from generation companies through power purchase agreements (PPAs), and then supply it to their consumers and the Discoms are facing financial Problems.

What is the Fundamental Problem:-

i) Cross Subsidization:- Electricity price for certain segments such as agriculture and the domestic category (what we use in our homes) is cross-subsidised by the industries (factories) and the commercial sector (shops, malls). This affects the competitiveness of industry.

ii) AT&C Losses:- Problem of AT&C (aggregate transmission and distribution losses), which is a technical term that stands for the gap between the cost of the electricity that a Discom gets from the generating company, the bills that it raises and the final realisation from the collection process from end-consumers such as you and me.

While there are regulatory bodies such as the Regulatory Commissions of the state (SERCs), which are largely responsible for ensuring that tariff revisions happen regularly and a discom recovers the money for the electricity that it supplies to each customer, this has not been that successful on the ground. As a result the discoms are perennially short of funds, even to pay those supplying power to them, resulting in a cascading impact up the value chain.
Hence the intervention announced last week seeks to ensure time-bound funding assistance to discoms through PFC and REC, so that they can clear their bills.

2)Explained: The new Indian road to Lipu Lekh, Nepal’s protests, and the strategic importance of the area

The 80 km road goes right up to the Lipu Lekh pass on the LAC, through which Kailash Mansarovar pilgrims exit India into China to reach the mountain and lake revered as the abode of Siva. The last section of 4 km of the road up to the pass still remains to be completed.

The new road is also expected to provide better connectivity to Indian traders for the India-China border trade at the Lipu Lekh.

Importance of the Road :- Building roads leading to the contested LAC with China has been a fraught exercise for the government. The India China Border Roads as they are known, were conceptualised in the late 1990s by a consultative group called the China Studies Group, cleared at the highest level of the Cabinet Committee on Security, and given the go-ahead for construction in 1999.

Nepal’s case is that the river originates from a stream at Limpiyadhura, north-west of Lipu Lekh. Thus Kalapani, and Limpiyadhura, and Lipu Lekh, fall to the east of the river and are part of Nepal’s Far West province in the district of Dharchula.

New Delhi’s position is that the Kali originates in springs well below the pass, and that while the Treaty does not demarcate the area north of these springs, administrative and revenue records going back to the nineteenth century show that Kalapani was on the Indian side, and counted as part of Pithoragarh district, now in Uttarakhand. Both sides have their own British-era maps as proof of their positions.

Since the 1962 war with China, India has deployed the ITBP at Kalapani, which is advantageously located at a height of over 20,000 ft and serves as an observation post for that area.

Nepal calls it an encroachment by the Indian security forces. Nepal has also been unhappy about the China-India trading post at Lipu Lekh, the earliest to be established between the two countries.

Shipkila in Himachal followed two years later, and Nathu La only in 2006.

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