💥Join UPSC 2027,2028 Mentorship (July Batch) + XFactor Notes & Microthemes PDF
Talk to Mentor

Civilsdaily

Login

GS Paper: GS3-13.Infrastructure: Energy, Ports, Roads, Airports, Railways etc:

  • How to improve the financial picture of the DisComs

    The article analyses the factors responsible for financial difficulties faced by the DisComs and suggests the ways to deal with the issues.

    Important role of the DisComs

    • Distribution Companies (DisComs) are the utilities that typically buy power from generators and retail these to consumers.
    • For all of India’s global leadership for growth of renewable energy, or ambitions of smart energy, the buck stops with the DisComs.
    • The days of scarcity of power are over.
    • The physical supply situation has mostly improved.
    • But the financial picture has not brightened much.

    Analysing the data on liabilities of the DisComs

    •  ₹90,000 crore (later upgraded to  ₹1,25,000 crore) was earmarked for DisComs in ₹20-lakh crore package announced in the wake of Covid-19’s economic shock.
    • The Power Finance Corporation (PFC)’s Report on Utility Workings for 2018-19 showed dues to generators were ₹2,27,000 crore, and this is well before COVID-19.
    • It also showed similar Other Current Liabilities.
    • DisComs have delayed their payments upstream (not just to generators but others as well) — in essence, treating payables like an informal loan.

    But why do DisComs not pay on time?

    • Ideally, DisComs should not incur losses as they enjoy a regulated rate of return.
    • While AT&C losses can explain part of any gap. Major reasons are as discussed below:

    1) Regulatory issue and cash-flow gap due to it

    • The first problem starts at the regulatory level where even if DisComs performed as targeted, across India, they would face a considerable cash flow gap.
    • This cash flow gap was ₹60,000-plus crore in FY18-19 compared to their then annual cost structure of ₹7.23-lakh crore.

    2) Payabeles issue: Due from consumers, state and regulatory gap

    •  These dues are of three types.
    • First, regulators themselves have failed to fix cost-reflective tariffs thus creating Regulatory Assets,which are to be recovered through future tariff hikes.
    • Second, about a seventh of DisCom cost structures is meant to be covered through explicit subsidies by State governments.
    • Third, consumers owed DisComs over ₹1.8 lakh crore in FY 2018-19, booked as trade receivables.
    • State governments are the biggest defaulters, responsible for an estimated a third of trade receivables, besides not paying subsidies in full or on time.

    3) Challenge of renewable energy

    • The rise of renewable energy means that premium customers will leave the system partly first by reducing their daytime usage.
    • And as battery technologies mature, their dependence on DisComs may wane entirely.
    • Even without batteries, regulations permitting, they may want to find third party suppliers under competitive models.

    Impact of Covid pandemic

    • COVID-19 has completely shattered incoming cash flows to utilities.
    •  The revenue implications were far worse since the lockdown disproportionately impacted revenues from so-termed paying customers, commercial and industrial segments.
    • Reduced demand for electricity did not save as much because a large fraction of DisCom cost structures are locked in through Power Purchase Agreements (PPAs) that obligate capital cost payments, leaving only fuel savings with lower offtake.

    Way forward

    • We will probably need a much larger liquidity infusion than has been announced thus far, but it also must go hand-in-hand with credible plans to pay down growing debt.
    • We need a complete overhaul of the regulation of electricity companies and their deliverables.
    • We need to apply common sense metrics of lifeline electricity supply instead of the political doleout of free electricity even for those who may not deserve such support.
    • For the rest, regulators must allow cost-covering tariffs.

    Consider the question “Examine the factor responsible for making the DisComs financial unviable? Sugget the pathways to deal with the issues faced by the DisComs”

    Conclusion

    The financial problems of DisComs have been brewing for many yearsHowever, if business as usual was not even good enough before COVID-19, it will not be workable for the current national needs of quality, affordable, and sustainable power.

  • Kisan Suryodaya Yojana

    PM has launched the ‘Kisan Suryodaya Yojana’ aimed at providing day-time electricity to farmers in the State of Gujarat for irrigation and farming purposes.

    Try this question from CSP 2017:

    Q. The term ‘Domestic Content Requirement’ is sometimes seen in the news with reference to-

    (a) Developing solar power production in our country

    (b) Granting licences to foreign T.V. channels in our country

    (c) Exporting our food products to other countries

    (d) Permitting foreign educational institutions to set up their campuses in our country

    Kisan Suryodaya Yojana

    • Under the scheme, farmers will be able to avail power supply from 5am to 9pm for irrigation purposes.
    • Around 234 transmission lines are to be installed under the scheme. Each line is to carry the power of 66 KW. They are to be erected to a total length of 3,490 km.
    • Dahod, Patan, Mahisagar, Panchmahal, Chhota Udepur, Kheda, Tapi, Valsad, Anand and Gir-Somnath have been included under the Scheme for 2020-21.
    • The remaining districts will be covered in a phase-wise manner by 2022-23.

  • Kaleshwaram Lift Irrigation System (KLIS)

    The National Green Tribunal (NGT) wants a relook at Kaleshwaram Project since the Telangana government subsequently changed the design of the project.

    Try this question from our AWE initiative:

    The Kaleshwaram Project

    • The Kaleshwaram Lift Irrigation System is considered to be one of the world’s largest multi-purpose projects.
    • It is designed to provide water for irrigation and drinking purposes to about 45 lakh acres in 20 of the 31 districts in Telangana, apart from Hyderabad and Secunderabad.
    • This project is unique because Telangana will harness water at the confluence of two rivers with the Godavari by constructing a barrage at Medigadda in Jayashankar Bhupalpally district.
    • It would reverse pump the water into the main Godavari River and divert it through lifts and pumps into a huge and complex system of reservoirs, water tunnels, pipelines and canals.

    Records to its glory

    • The project has set many records with the world’s longest water tunnels, aqueducts, underground surge pools, and biggest pumps.
    • By the time the water reaches Kondapochamma Sagar, the last reservoir in the system, the water would have been lifted to a height of 618 metres from its source at Medigadda.
    • The total length of the entire Kaleshwaram project is approximately 1,832 km of which 1,531 km is gravity canals and 203 km comprises water tunnels.

    How important is KLIS to Telangana?

    • The project will enable farmers in Telangana to reap multiple crops with a year-round supply of water wherein earlier they were dependent on rains resulting in frequent crop failures.
    • This year, Telangana farmers have already delivered bumper rabi crops of paddy and maize due to better irrigation facilities and an extended monsoon.
    • KLIS covers several districts which used to face rainfall deficit and the groundwater is fluoride-contaminated.
    • Apart from irrigation, a main component of the project is the supply of drinking water to several towns and villages and also to twin cities of Hyderabad and Secunderabad.
    • Mission Bhagiratha, the Rs 43,000-crore project to supply drinking water to every household in villages, draws a large quantity of water from the KLIS and some quantity from projects on River Krishna.
    • There is a burgeoning freshwater fishing industry in the state.

    Issues raised by NGT

    • The NGT has observed that the Telangana government subsequently changed the design of the project to increase its capacity.
    • By increasing its capacity to pump 3 TMC water from 2 TMC, large tracts of forest land and other land was taken over and massive infrastructure was built causing adverse impact on the environment.
    • Extraction of more water certainly requires more storage capacity and also affects hydrology and riverine ecology of Godavari River.
    • Such issues have to be examined by the statutory authorities concerned.

    B2Basics

    National Green tribunal

    • It is a specialised body set up under the National Green Tribunal Act (2010) for effective and expeditious disposal of cases relating to environmental protection and conservation of forests and other natural resources.
    • With the establishment of the NGT, India became the third country in the world to set up a specialised environmental tribunal, only after Australia and New Zealand, and the first developing country to do so.
    • NGT is mandated to make disposal of applications or appeals finally within 6 months of filing of the same.
    • The NGT has five places of sittings, New Delhi is the Principal place of sitting and Bhopal, Pune, Kolkata and Chennai are the other four.

    Structure of NGT

    • The Tribunal comprises of the Chairperson, the Judicial Members and Expert Members. They shall hold office for term of five years and are not eligible for reappointment.
    • The Chairperson is appointed by the Central Government in consultation with Chief Justice of India (CJI).
    • A Selection Committee shall be formed by central government to appoint the Judicial Members and Expert Members.
    • There are to be least 10 and maximum 20 full time Judicial members and Expert Members in the tribunal.

  • India’s First Seaplane Project

    The first of the five seaplane services in Gujarat, connecting Sabarmati River in Ahmedabad to the Statue of Unity in Kevadia in Narmada district, will be inaugurated on October 31

    India’s first seaplane

    • A seaplane is a fixed-winged aeroplane designed for taking off and landing on water. It offers the public the speed of an aeroplane with the utility of a boat.
    • The first seaplane project of the country is part of a directive of the Union Ministry of Civil Aviation.
    • As per the directive, the Airports Authority of India (AAI) requested state governments of Gujarat, Assam, Andhra Pradesh and Telangana and the administration of Andaman & Nicobar to propose potential locations for setting up water aerodromes to boost the tourism sector.

    Where will the seaplane connect?

    • In Kevadia, the proposed Terminal will be spread over 0.51 acres in the premises of the Sardar Sarovar Narmada Nigam Ltd., located in the Panchmuli lake (Dyke 3) of the Sardar Sarovar Dam at Limdi village.
    • It is approximately 90 km from Vadodara, 150 km from Surat and 200 km from Ahmedabad — with an aerial distance of 74.6km from Vadodara airport.

    What impact will it have on the environment?

    • The water aerodrome is not a listed project/activity in the Schedule to the Environmental Impact Assessment Notification, 2006 and its amendments.
    • However, the activities proposed under the water aerodrome project may have a similar type of impact as that of an airport.
    • There has to be a bathymetric and hydrographic survey by Inland Waterways Authority of India (IWAI).
    • During seaplane operations, there will be turbulence created in the water while takeoff and landing of seaplanes. This will lead to more operation process i.e. mixing of oxygen in the water.
    • This will have a positive impact on the aquatic ecosystem near seaplane operations increasing oxygen content and decreasing carbon content in this system.

  • Places in news: Mullaperiyar Dam

    The Mullaperiyar dam has recently turned 125.

    Try this PYQ:

    Q. What is common to the places known as Aliyar, Isapur and Kangsabati?

    (a) Recently discovered uranium deposits

    (b) Tropical rain forests

    (c) Underground cave systems

    (d) Water reservoirs

    Mullaperiyar Dam

    • It is a masonry gravity dam on the Periyar River in the Indian state of Kerala.
    • It is located 881 m above mean sea level, on the Cardamom Hills of the Western Ghats in Thekkady, Idukki District of Kerala.
    • It was constructed between 1887 and 1895 by John Pennycuick and also reached in an agreement to divert water eastwards to the Madras Presidency area (present-day Tamil Nadu).
    • Pennycuick is widely worshipped as a hero by farmers in the four districts of southern Tamil Nadu, where water from the dam meets the drinking water needs and irrigates thousands of hectares.

    Why is the dam special?

    • The dam was constructed surmounting many odds, with malaria and thick jungles taking a toll on workers. It was a huge challenge before him to construct the dam and divert the river course.
    • Pennycuick sowed the seeds of river interlinking to bring barren and rain-starved areas under cultivation.
    • To fund dam construction, gold ornaments were donated by Chettiar families and farmers in Cumbom valley also gave their meagre savings to Pennycuick.
    • Pennycuick even sold his ancestral property in Britain and spent the amount for completing the works of the dam when the expenses exceeded the allotted funds.
    • The British government endowed him with the ‘Companion of Star of India’, a high civilian honour. He died on March 9, 1911, at Frimley in Britain.

  • National Authority of Ship Recycling (NASR)

    The Central government has notified the Director-General of Shipping as the national authority for recycling of ships under the Recycling of Ships Act, 2019.

    The ‘Hong Kong Convention’ is the odd man out here. Read more about the convention at:

    https://www.civilsdaily.com/news/pib-hong-kong-international-convention-for-safe-recycling-of-ships-2009/

    About NASR

    • The national authority of ship recycling will be set up in Gandhinagar, Gujarat.
    • The location of the office will benefit the ship recycling yard owners situated in Alang, Gujarat which is home to the largest ship recycling industry in the world.
    • DG Shipping is authorized to administer, supervise and monitor all activities relating to ship recycling in the country.
    • DG Shipping will oversee the sustainable development of the ship recycling industry, monitoring the compliance to environment-friendly norms and safety and health measures for the stakeholders.
    • DG Shipping will be the final authority for the various approvals required by the ship-recycling yard owners and state governments.

    Recycling of Ships Act, 2019

    • Under the Ship Recycling Act, 2019, India has acceded to the ‘Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships’.
    • This was adopted by the International Maritime Organization (IMO).
    • DG Shipping is a representative of India in the IMO and all the conventions of IMO are being enforced by DG Shipping.

  • Places in news: Zojila Tunnel

    Union Transport Ministry has launched the first blasting for construction-related work at the Zojila tunnel that will provide all-year connectivity between Srinagar valley and Leh.

    These days various Himalayan passes and tunnels are overwhelmingly seen in news. Open your Atlas and try to spot all of them for now and once before the exam.

    Zojila Tunnel

    • The Zojila is set to be Asia’s longest bi-directional tunnel.
    • It will connect Srinagar, Dras, Kargil and Leh via a tunnel through the famous Zojila Pass.
    • Located at more than 11,500 feet above sea level, the all-weather Zojila tunnel will be 14.15 km long and ensure road connectivity even during winters.
    • It will make the travel on the 434-km Srinagar-Kargil-Leh Section of NH-1 free from avalanches, enhance safety and reduce the travel time from more than 3 hours to just 15 minutes.
    • The speed limit inside the tunnel is likely to be the same as in the Atal tunnel – 80 kmph.

    Its significance

    • The project holds strategic significance as Zojila Pass is situated at an altitude of 11,578 feet on the Srinagar-Kargil-Leh National Highway and remains closed during winters due to heavy snowfall.
    • At present, it is one of the most dangerous stretches in the world to drive a vehicle and this project is also geo-strategically sensitive.

  • [pib] Bharatmala Pariyojana

    A total of 322 projects in a length of 12,413 km have been awarded under Bharatmala Pariyojana. Further, 2921 Km has been constructed under the Project till the date.

    Try this PYQ:

    Q.Consider the following pairs:

    National Highway: Cities connected

    1. NH 4: Chennai and Hyderabad
    2. NH 6: Mumbai and Kolkata
    3. NH 15: Ahmedabad and Jodhpur

    Which of the above pairs is/are correctly matched?

    (a) 1 and 2 only

    (b) 3 only

    (c) 1, 2 and 3

    (d) None

    Bharatmala Pariyojana

    • It is a centrally-sponsored and funded the Road and Highways project.
    • It is an umbrella program for the highways sector that focuses on optimizing the efficiency of freight and passenger movement across the country by bridging critical infrastructure.
    • The total investment for 83,677 km committed new highways is estimated at ₹5.35 lakh crore making it the single largest outlay for a government road construction scheme.
    • It works for the development of Economic Corridors, Inter Corridors and Feeder Routes, National Corridor Efficiency Improvement, Border and International connectivity roads, Coastal and Port connectivity roads and Green-field expressways.
    • The ambitious umbrella programme has subsumed all existing Highway Projects including the flagship National Highways Development Project (NHDP), launched in 1998.

  • Reviving the private investment in infrastructure

    Declining private investment in the infrastructure needs policy overhaul. The article suggests the changes in the policy and approach on the part of the government to achieve the sustainable 40 per cent private investment in the infrastructure. 

    Declining private investment in infrastructure

    Currently, private financing into the infrastructure sector has declined to around 20 per cent of the total funding.

    Reasons for the decline are-

    • 1) the crisis in the non-banking finance sector.
    • 2) the financial challenges faced by infrastructure companies.
    • 3) the inadequately developed Indian market for infrastructure financing.
    • The Economic Survey 2017-18 has assessed India’s infrastructure financing needs at $4.5 trillion by 2040.
    • Reviving private investment flows into infrastructure to around 40 per cent will be key to attaining this threshold.

    Actions need to be taken to revive the private investment in infrastructure

    • The Vijay Kelkar committee had put out a balanced report in 2015 on overhauling the PPP ecosystem, including governance reform, institutional redesign, and capacity-building.

    Ramping up private investments in infrastructure will need action on two fronts:

    • 1) Refreshing institutions and policies for channelling financing.
    • 2) Providing a stable, durable, and empowering ecosystem for private players to partner with government entities.

    1) Institutions and policies for channelling financing

    • Due to long-duration profitability cycles of infrastructure projects, successful PPP  requires stable revenue flow assurances and a settled ecosystem to investors over long periods.
    • This could be achieved means of policy stability, assurances possibly secured by law.
    • PPP contracts also need to provide for mid-course corrections to factor in uncertainties including utilisation patterns, as well as the creation of competing infra assets.
    • Government partners in PPP arrangements need to ensure that open-ended arrangement that might entail unforeseeable risk are minimised for the private investor, including aspects such as land availability and community acceptance.

    2) Institution and policies for financing

    • There is a need to change the culture and attitude towards the conjoining of government entities and private partners.
    • Kelkar committee has stated that there needs to be an approach of “give and take” and the Government should avoid a purely transactional approach.
    • Government should avoid trying to minimise risk to themselves by passing on uncertain elements in a project — like the land acquisition risk — to the private partner.
    • This attitudinal change can be achieved by amending the Prevention of Corruption Act to encompass modern-day requirements, including factoring in the need for government agents to take calibrated risks while engaging with the private sector.
    • The private partners also need to be incentivised to focus on project outcomes, with guard-rails in place to discourage rent-seeking behaviour.
    • In sum, risk avoidance by the public entity and rent-seeking by the private partner are the twin challenges that need to be carefully addressed.
    • On the regulatory front, a compelling need would be to promulgate a PPP legislation which can provide a robust legal ecosystem and procedural comfort.

    Consider the question “Declining private investment in the infrastructure has several implications for the economy. In ligh of this, examine the factor for such decline and suggest the measures to boost the private investment in the infrastructure.” 

    Conclusion

    After we emerge out of this pandemic, a focus area for public policy has to be the creation of a modern-day, sustainable and resilient infrastructure. . Designing a fresh approach and creating a stable policy environment that provides comfort and incentives to private investors will be key to attaining this goal.

  • Production Linked Incentive (PLI) Scheme

    The Ministry of Electronics and IT had approved some proposals by electronics manufacturers under its Production Linked Incentive (PLI) Scheme.

    Try this MCQ:

    Q.The Production Linked Incentive (PLI) Scheme often seen in news is related to-

    a) Electronics manufacture

    b) Khadi and Village Industries

    c) MSMEs

    d) None of these

    What is the PLI scheme?

    • As a part of the National Policy on Electronics, the IT ministry had notified the PLI scheme on April 1 this year.
    • The scheme will, on one hand, attract big foreign investment in the sector, while also encouraging domestic mobile phone makers to expand their units and presence in India.
    • It would give incentives of 4-6 per cent to electronics companies which manufacture mobile phones and other electronic components.
    • A/c to the scheme, companies that make mobile phones which sell for Rs 15,000 or more will get an incentive of up to 6 per cent on incremental sales of all such mobile phones made in India.
    • In the same category, companies which are owned by Indian nationals and make such mobile phones, the incentive has been kept at Rs 200 crore for the next four years.

    Tenure of the scheme

    • The PLI scheme will be active for five years with financial year (FY) 2019-20 considered as the base year for calculation of incentives.
    • This means that all investments and incremental sales registered after FY20 shall be taken into account while computing the incentive to be given to each company.

    Which companies and what kind of investments are considered?

    • All electronic manufacturing companies which are either Indian or have a registered unit in India will be eligible to apply for the scheme.
    • These companies can either create a new unit or seek incentives for their existing units from one or more locations in India.
    • Any additional expenditure incurred on the plant, machinery, equipment, research and development and transfer of technology for the manufacture of mobile phones and related electronic items will be eligible for the incentive.
    • However, all investment done by companies on land and buildings for the project will not be considered for any incentives or determine the eligibility of the scheme.