Intro: It is hoped that the government takes the aforesaid most expedient steps sooner than later to salvage the power sector.?
The new government under the stewardship of Narendra Modi has eloquently made the call for fast developments of manufacturing base in India by sloganeering on ‘Make in India’ and rightly so. The government has put up the points for strengths and opportunities associated with Indian power industry in its website in a very clear and elaborate manner. It is very well known and understood by all that electrical power is the basic input for development and the prime requisite for the creation of the manufacturing base in India. But are the right steps in this direction visible?
India”s present installed power generation capacity of about 2, 50, 000 MW has the major share of thermal power generation based on coal as raw material. This share is nearly 59 percent. We can compare our installed generation capacity with that of China where the installed capacity has crossed the figure of 1.2 million MW. It is an interesting comparison when seen in the background of the time of India”s independence in 1947 when the power generation installed capacities of the two large Asian countries were almost equal and China”s population exceeded India”s by a much higher margin than today.
India has been able to tap only about 23 percent of her known coal reserves, thanks to the monopolisation of mining sector by Central and state PSUs. The UPA government, while launching the power sector reforms, failed to initiate steps to ensure augmentation of indigenous coal supply for new thermal power plants. Abject failure to reform the grossly inefficient power distribution sector compounded problems, thus ensuring that development choking power shortage continued.
Before it is too late, the present government should launch coal sector and distribution sector reforms. We can involve or co-opt the private sector in coal mining. FDI may be invited in this area, especially for deep cast mining where we are technologically deficient. Our focus should also be on tapping the unexploited reserves of coal besides on reallocation of the coal mining licenses cancelled by the Supreme Court in the “Coalgate” scam.
We are yet to see any blueprint or agenda or proposal for power distribution sector reforms put up by the power minister, who knows only too well the importance of a viable and sustainable revenue generating business model for distribution companies (Discoms) on which will also depend the viability of business models for power transmission and generation companies. India”s power distribution sector is one of the most inefficient in the world, with average technical and commercial losses exceeding 25 percent. No amount of investment in power generation or transmission sector is going to be worthwhile unless these losses are brought to below 5 percent. This is stated on the basis of the present ground realities which indicate that in the future, the power industry will run on healthy, commercial lines and not on subsidies of the government.
There is great talk of creation of huge solar and wind power generating capacities in the country. The Prime Minister is on record having talked of 1, 00, 000 each MW of solar and wind power generation capacity in India with US investment. Even for the much fancied solar power generation, the commercial viability of business models will depend on sound Discom operations. Unless the losses and inefficiency in power distribution are plugged, neither the transmission companies nor the generation companies of power can commercially survive. Therefore, privatisation of distribution networks is the pressing need of the hour. Since electricity is a concurrent subject, the state governments need to take initiatives in privatising the Discoms and doing away with free electricity to farmers, a factor hugely responsible for paralysing the power sector in India. Privatisation can be made binding on state governments through a suitable amendment in Electricity Act 2003. Alongwith it, modernisation of urban distribution networks is called for, which will improve the efficiency of power delivery to industrial and retail consumers. The existing 100 percent private sector Discoms in Mumbai, Kolkata, Ahmedabad and Surat are models to emulate. The Delhi’s Discoms built on PPP (Public Private Partnership) model are not the ideal entities because they have given a none too good account of themselves over the years. The Power Minister’s announcement that 400 billion USD investment shall be coming in the Indian power sector to achieve 24×7 power supply for all by 2019 is greatly welcome. But to achieve this ambitious target, we need to act swiftly. Reforms have to come fast and quick. There is not much time for time killing debates and discussions.
Atul Sehgal ?( The writer is a senior columnist)