To retell old power story is tempting
While the Indian power sector is limbing, the undemocratic China has been building power capacity at a dramatic rate. China added 95,000 mw in 2006 alone, almost the total capacity of India.
By Nevin John, TNN |
MUMBAI: If the Central Electricity Authority (CEA) statistics are anything to go by, India’s power crisis would only worsen. While the Indian power sector is limbing, the undemocratic China has been building power capacity at a dramatic rate. China added 95,000 mw in 2006 alone, almost the total capacity of India.
The hot and humid April-May saw an average 10.4% electricity shortfall with the demand-supply gap widening to 6,344 million units (mu). The surging energy demand had put already-stretched distribution utilities under tremendous stress.
Massive load-shedding and power cuts crippled normal life across the length and breadth of the country, except very few states, as the utilities ran around for additional power to bridge the demand-supply gap of over 15,000 mega watt (mw).
But the issue has remained unresolved and the consumers facing rationing of power for a decade have now resigned to blackouts. At present, India, which posted a 9.4% GDP growth last fiscal, has an installed capacity of 132,110 mw.
India could add a meagre 21,000 mw in the 10th Plan as against the targeted 41,000 mw. Despite the nearly 50% slippage in meeting the target, government is aiming to create a new generation capacity of 78,000 mw under the 11th Plan. But nobody in the power sector would believe that the target is achievable.
At present, the state sector contributes its might with 69,656 mw and central sector 45,340 mw. Private sector adds the remaining capacity. With this total generation capacity, India has produced 54,436 mu in April while the requirement was 60,780 mu, according to CEA.
ADVERTISEMENT
“The country failed to add fresh capacity at regular intervals through policy liberalisation. This led to huge demand-supply gap, which can not be bridged in the near future. Electricity is the most important infrastructural input in the development and growth of economy.
Any economic activity, be it agriculture, industry, commerce, trade or service sector, all require, for their growth and expansion, the input of electricity. For a 9% growth of economy, growth in the electricity production and consumption will have to be at least of the same order, if not more.
Consumption of energy, and more particularly of electricity, is recognised world over as the most important index of the extent of advancement of the country and of the standard of living of people,” said an industry analyst. Electricity industry is capital-intensive having long gestation period. Just before commensing the construction of a power plant, there required at least 30 clearances from various ministries and departments.
“A minimum of two-three years required for getting all the clearances, which resulted in time and cost over-runs. Other issues include design deficiencies, faulty fuel linkages, tardy land acquisition and failure to assess likely tariffs,” said a power company official.
ADVERTISEMENT
Neither the Centre nor state governments have taken any steps to add power capacity in the past. Due to this Maharashtra had recorded the highest power deficit of 2,698 mu — over one-third of the country’s total shortage — during the summer and faced a maximum of 14 hours load-shedding.
The supply was 24.9% short of the demand in April and May. Gujarat, the paradise of private investors, had come next to Maharashtra by facing a deficit of 981 mu, an average shortfall of 16.3%. With a deficit of 515 mu in Madhya Pradesh, the aggregate shortfall of western region stood at 4,352 mu, down by 19.6%.
The top five bleeding states include Uttar Pradesh and Andhra Pradesh. Role of private sector in the electricity industry has been limited. On the generation side, the private sector accounts for over 10% with the balance 90% being contributed by states. The government is hoping that through ultra mega power projects (UMPPs), the contribution of the private sector will grow in future.
“For increasing private investments in the sector, the government should address issues such as timely clearances, fuel-linkage and financial support. Now, the clearances consume a considerable time. The fuel arrangement procedures are inadequate. The ministry of coal is yet to come out with its policy on long-term coal development programmes through private sector involvement. The financial closure exercises for new power projects became nightmarish. The lenders are not confident of funding the power projects because of the high regulation in pricing,” said a government official.
Inefficient electricity use and high transmission and distribution loss are other major problems. The state electricity boards are facing over 40% transmission and distribution loss owing to the high power theft. Lack of commercial approach in management of utilities has led to unsustainable financial operations also. Existing cross-subsidies have been creating additional burden as well. What we need is a quick policy reform to address these issues and make the country electricity surplus.
Start a SIP with as low as ₹500 with ET Money App!
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
