WHEN HE took over as the chairman of Delhi's two largest power utilities, Lalit Jalan received a file of defaulters. Among the pages was a bizarre piece of information: a yellow post-it on which someone had scribbled how stolen power was used to wash buffaloes in ministerial bungalows, while the staff brazenly argued that the animals would not produce any milk otherwise. It's a bizarre but peculiarly Indian form of transmission loss — in informed circles, transmission and distribution (T&D) losses are often called by another name: jugaad.
Last month, as most of north India, including Delhi, reeled under the hottest June in 17 years, huge swathes of the national capital region went without electricity for hours without end. Along with the long power cuts came the water shortage — in most houses, power is needed to run the pump from the underground tanks to overhead ones, or for the Jal Board to pump water to colonies. Many lived without water supplies for a week. Some slept in their air-conditioned cars to escape the searing heat.
Naturally, those in the distribution business — like Jalan — faced a powerless city's wrath. Angry residents attacked the offices of Bombay Suburban and Electric Supply (BSES), Delhi's largest power distribution company (discom). People also blocked roads in outrage over endless power cuts. Elsewhere like western Uttar Pradesh, a crowd forced an engineer to sit on a funeral pyre, before a police rescue team lobbed teargas shells and canecharged the rioters. "Handling a power crisis – especially during the summer – is like steering molten lava from a volcano," Jalan recently told his staff.
In recognition of her constituents' pain, Delhi Chief Minister Sheila Dikshit hauled Jalan over the coals for the unscheduled cuts, blaming BSES for not having bought enough power to meet peak demand or having corrected the local faults that caused many breakdowns. "The situation is grim," Dikshit agreed.
But the Indian Capital is hardly alone in having a power crisis to battle. In Lucknow, state power corporation head Navneet Sehgal cancelled leave for all employees of the Uttar Pradesh Power Corporation Limited because the situation was volatile. "I cannot take any risks," Sehgal from Lucknow. In Kolkata, the first two weeks of June were virtually nightmarish as people in the city and its suburbs went without power for almost four to six hours every day. And in Punjab, government offices have been asked to function from 7:30am to 1pm only — to beat the power blues.
Some of the blame for this year's massive crisis can be laid at nature's door. With the rainfall deficit mounting to over 50 percent across India and hydel power stations facing a 10-year-low water level (they have been dropping steadily over the last month's blistering heat-wave), there has been an almost 25 percent drop in generation from the Northern Grid. Quite simply, that means that against a demand of 35,000MW, the grid is barely able to provide around 29,000MW.
Another reason is the fact that the 1,500MW Nathpa Jhakri hydel power project in Himachal Pradesh has been temporarily shut down after silt content in the Sutlej river rose above permissible limits. Its closure has meant that states depending on power from the plant (Punjab, Delhi, Haryana, Chandigarh, Jammu & Kashmir, Rajasthan, Uttarakhand and Himachal itself) began overdrawing from the Northern Grid, putting it under strain. Some burnt transformers in the Dadri project too will take time to be replaced — all adding to the power woes.
What can be immediately done about the shortfall? "Nothing can happen overnight, and loadshedding is inevitable," says Anil Razdan, who retired some months ago as India's power secretary. Razdan says that officials are confident about power supply in the southern and western regions of the country, but agrees that the eastern and northern areas are in crisis. He reiterates the fact that heads of various north Indian states have stopped making assurances about supply and begun advising caution against wastage of power.
WHATEVER THE causes, despite near two decades of power reforms, over 40 percent of the country's population is without electricity and 60 percent of Indian firms and a large percentage of homes rely on captive or back-up generation. In 2009-10, the gap between power demand and availability was 14,978MW, against a deficit of 13,024MW in 2008-09. And this was despite an anticipated capacity addition of 12,000MW this year, the highest ever in a single year. The Planning Commission had added slightly over 20,000MW during the entire 10th plan. "The power situation in India has actually deteriorated," Gajendra Haldea, advisor to the deputy chairman of the Planning Commission, wrote in a recent note to his superiors. Consider the case of Delhi, which does not have a power plant and not enough generation to meet its needs. The ailing Indraprastha plant was set up in the late 1960s, while the Badarpur plant in 1973. The commissioning of the Pragati power plant in 2002 added 350MW to Delhi's generation, but there is still a huge shortfall. Delhi is the second highest power guzzler in north India, at over 4,000MWonly consuming second to Uttar Pradesh's demand for 7,000MW.
If power generation in Delhi is in a poor state, other states are worse off. Neighbouring Haryana, thanks to an unplanned Gurgaon, has a 60 percent shortage at peak time, while states like Maharashtra (peak deficit 23 percent) and Uttar Pradesh (peak deficit 22 percent) are also in the crisis zone. West Bengal has extra power, but lacks substations to route it to power-starved Kolkata.
THE CITY, whose distribution is handled by the RPG-owned Calcutta Electric Supply Corporation (CESC), had a 270MWshortfall, while the state had a 150MW surplus that it exported. The state power utility has invested Rs 160 crore in setting up two sub-stations to create an additional transmission facility of 300MW power to CESC. But the sub-stations haven't been commissioned — because of political opposition to land acquisition for the transmission towers. "It's a pity that when the state has excess power, Kolkata is reeling under power cuts," says Moloy De of the state distribution company.
The Planning Commission estimates that 10 out of 28 states will have a power deficit of over 20 to 30 percent in 2009-10. And everywhere, experts agree that the power shortage is a man-made problem. For instance, in Delhi, two private discoms — the Tata group-promoted New Delhi Power Limited (NDPL) and the Anil Amabani-promoted BSES Rajdhani Power Limited and BSES Yamuna Power Limited — distribute power to various parts of the city. BSES supplies power to east, west, south and central Delhi, while NDPL supplies to the north and north-eastern sections of the capital, once managed by the Delhi Vidyut Board (DVB) — whose employees have been allegedly booked for abetting power theft — that shifted to private distribution in 2002. The discoms control 51 percent of the company while 49 percent is with the state government. The discoms also function under the authority of a super-body, Delhi Electric Regulatory Authority. That means that they haven't been able to take action even when finding corruption. The more efficient Tatas, who run NDPL, were also fortunate to get the city's northern areas (although their zone includes the walled city and some slums, it's also home to Delhi University and other areas where power theft is relatively rare). On the other hand, BSES got the posh zone of south Delhi (which includes some of the worst offenders of power theft) and dozens of unrecognised villages and slums.
DESPITE TWO DECADES OF POWER REFORMS, 40 PERCENT OF THE COUNTRY IS STILL WITHOUT ELECTRICITY
So how is a power shortfall to be managed? With deficient monsoons reducing hydropower generation by around 40 percent, the power ministry is stressing more on power from coal and natural gas. Why not? Gas-based power plants are running near full capacity for the first time, helping the country marginally offset the shortfall in hydropower generation. Latest figures say hydropower generation has fallen to 25,000MWfrom 36,000MWin the last fortnight, though the demand for power is rising by around 3,900MW daily. At the same time, gas-based generation has risen 2,000MW to 14,000MW after Reliance Industries (RIL) started producing gas from its Krishna-Godavari (K-G) field. In fact, the supply from the RIL's block has made the power ministry confident of overcoming the darkened monsoon prospects.
Though natural gas accounts for a small part of the total power generated in India in contrast with hydropower, which constitutes 25 percent of the 1,50,000MW installed capacity, experts say that is the future even if the generation has already risen 2,000MW. Coal-based generation has also gone up by 800MW. Does that mean gas is the answer to the power crisis?
Power Secretary HS Brahma recently told a seminar that availability of water for power generation was down to 15,000 cusecs in contrast with the normal level of 20,000 cusecs, and the situation will become alarming if the monsoon is more than 10 percent below normal. The problem is specifically acute in northern and north-eastern parts of the country, since over 100 hydropower stations (that is, 60 percent of the 174 stations) are in north India, which is facing deficient rains. Brahma hopes RIL will increase its gas production by the end of December. "Ultimately, we have to devise ways other than just coal and water for power-generation. India will look for a larger share of nuclear power but that will happen by 2020. Solar is slowly making its impact it has high production costs."
India's 600 plus KW per capita consumption is half that of China and way behind US's 12,000 plus KW. Hence, the question is not about India's consumption patterns but of its growing needs. You have to grow power. What's more important is the management of electricity that is available. It is not an insuperable task. The thermal plants contribute about 70 percent of electricity, and the hydro-electric segment 22 percent. The fluctuating monsoon which affects power generation in the hydro projects can always be compensated in thermal, nuclear and other segments. But we must make it happen.
THE UNDERLYING truth is that the crisis in the power sector is a self-inflicted one. The World Bank says at least $4 billion in electricity is unaccounted for each year in India, while Transparency International says that in 2008 Indians paid more than $650 million in bribes to get new connections or correct bills.
"Indian power is like a child without parents," quips a senior bureaucrat in the power ministry, requesting anonymity. In the 1970s, state governments offered free power to the agriculture sector and eventually realised it had no records of how much power was being given away free and how much was being stolen. The governments changed tariffs but those were far lower than the levels needed to cover costs. Obviously, the state electricity boards (SEBs) incurred losses year after year. Worse, till the mid-1980s, Indian laws did not require the SEBs to earn a minimum rate of return. Losses mounted, pilferage was rampant and the SEBs refused to spend money on modernisation.
INDIA'S PER CAPITA INTAKE IS HALF OF CHINA'S. WE HAVE TO GROW POWER, AND MORE IMPORTANTLY, MANAGE IT
Privatisation, which was supposed to solve these problems, came — but its format was flawed. For consumers, privatisation of distribution meant that there should be accountability in the system, that if they paid more, they should also get power supply free from cuts. But that's exactly what didn't happen: generation and transmission are still in the hands of public sector companies, the utilities only get to distribute power. And they are unable to prosecute for theft or other losses.
Tariffs have risen, while clearly not enough capital has been invested in laying down new cables. The old, inefficient SEBs that provided insufficient power have indeed been replaced — by discoms that still provide insufficient power. No wonder consumers are outraged.
But there are those who think the customers need to share some of the blame. "The Indian consumer is still under an illusion that power should be available cheap. The consumer will not protest an airline fare hike, petrol fare hike or LPG fare hike, but will resist any attempt to hike power tariffs," former Power Secretary EAS Sarma told.
HARYANA: 200MW cut for industry at different hours throughout the week
HIMACHAL PRADESH: 43MW cut from 1830 to 2130 hours daily for industry
PUNJAB: Cuts ranging from 204 to 408MW in April, May and June
GUJARAT: All industries to stagger recess timings
ANDHRA PRADESH: Load shedding of up to 1,899MW throughout the state
KARNATAKA: Load shedding of up to 900MW throughout the state
TAMIL NADU: 40 percent power cut based on demand for high-value industries and commercial services. Load shedding up to 1,233MW
If the immediate crisis seems like being solved — with the advent of the monsoon over north India on June 30, ending heatwave conditions and therefore unrealistic peak demand — the incipient power crisis in the country, however, looms like a thundercloud. Razdan warns that the nation could plunge into darkness by 2012 — a year by which the power ministry wants to achieve its 'Power for All' target — if the growing power deficit is not resolved. That's because India will have a peak demand of almost 50 percent over current levels: 1,52,746MW by 2011-12, against just over 1,00,000 (in 2008-09).
Recognising the need for expansion in power generation, the Centre opened up the sector in 1991 and signed close to 200 MoUs with independent power producers to produce over 50,000MW; it even backed seven of these projects with counter guarantees. To no avail. Producers soon realised that the buyers of power were largely bankrupt. A marginal 4,000MW materialised out of a planned 50,000MW. "No one, virtually no one, cared for the power sector," says Harry Dhaul, directorgeneral of the Independent Power Producers Association of India (IPPAI). And then he adds: "I wonder if they do now."
Yet, the SEBs did not change. New Delhi agreed to a one-time write-off of SEB dues to the tune of a whopping Rs 41,473 crore in 2001 and demanded reforms. That was when states like Delhi privatised distribution systems. The Planning Commission admits that power is a highly sensitive issue for the states. An insider cites the example of how a board member of the DVB – who was also on the board of one of the discoms – almost fell from his chair when a discom director demanded the sacking of corrupt SEB officials. "The SEB would collapse," he said, and not just in jest.
In 2006, the Centre cleared ultramega power projects (4,000MW capacity) to the private sector even though financing them (at Rs 18,000 crore each) remained a contentious issue. At the same time, power from these projects will only be available from 2011-12 onwards. "India needs to get on with captive power plants," says Razdan, adding: "Hand over towns and cities to the private sector and weed out corruption. You need to have a drastic restructuring of the power sector to resolve India's problem."
If that sounds like a solution, it flatters to deceive: although, on paper, states agree to power sector reform, most are not keen to allow consumers to choose their source of power. Worse, there are cases where states with surplus power are selling the surplus to their state trading entities; they, in turn, rather than offering it for open access, auction it in an open market. Some states are charging absurd amounts of surcharge while some — who do not have enough power — do not want suppliers within their states to sell to anyone outside.
Experts agree that some fundamental reforms are a must before change can come to the power sector, because power remains a state subject and the Centre has limited jurisdiction over it. Often, the Centre is a helpless spectator when it sees expensive power leaking away in the transmission and distribution system. That needs to change. So do tariffs that are still to reflect the cost of service to the customers. Domestic and agro consumers pay less as compared to industrial and commercial consumers. And despite the cross subsidisation, overall revenue receipts are short of overall expenditure in many states. Now that is linked to the 31 percent T&D losses. If that is stemmed and the tariffs are rationalised, India will be able to somewhat implement what the mandarins call 'Power for All' – and is currently little short of daydreaming.
From Tehelka Magazine, Vol 6, Issue 27, Dated July 11, 2009
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