Not a leap in the dark
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Not a leap in the dark

Forsaking populism to reform the electricity sector can ensure grids don’t trip frequently

india Updated: Jul 30, 2012 20:40 IST
Hindustan Times

The northern grid, which supplies electricity to nearly a third of the country’s population, tripped on Sunday night, blacking out nine states. By noon on Monday, around 60% of the 36,000 megawatts (MW) the grid carries was restored and the situation seems to be well under the control of Power Grid Corporation, the overseer of load dispatch on this network. The power ministry will investigate what caused the latest failure — and its findings will help improve grid discipline — but India’s network suffers continuously from states overdrawing power. The country’s peak power deficit over the past decade has never dropped below 10%. In the five years to 2012, India planned on setting up an additional electricity capacity of 78,700 MW, of which it will just about manage 50,000 MW. That’s not enough to light up ten Delhis, leave alone states as big and as populous as Uttar Pradesh.

India is slow to set up new power capacity principally because it is short of fossil fuels. Coal is mined hesitantly and natural gas, the other feedstock for power plants, is just beginning to flow in from new offshore finds. The government rations both. The immediate response to a power sector in distress — thermal plants are idling a quarter of their capacity — is to give it a bigger slice of the pie. The sustainable response will need the pie to grow overall. This January, Prime Minister Manmohan Singh set up a committee to work through the issues that have been bedeviling electricity generation: a host of problems ranging from coal and gas shortages to environmental clearances to the price at which power is sold in the country. India’s basic energy shortage is compounded by the policy of selling electricity to consumers at politically correct prices. The government-owned distribution monopolies in the states have all but lost their ability to buy power because their political bosses force them to sell it cheap, sometimes free, to voters. This opportunism is hurting the economy: the government estimates unaccounted for sale of power in India, at a third of the total, costs the country 1% of its gross domestic product.

The road ahead for reforms in the power sector is well lit. Introduce competition in all three areas of the business — generation, transmission and distribution — to enhance productivity and contain leakages. Create an independent watchdog that can withstand the political pressures playing on different links of the nation’s power supply chain. Finally, free up pricing to make consumers more responsible for the electricity they use. This has been the broad course of electricity reforms the world over. India’s energy pricing, including transport and cooking fuels, is hopelessly caught in competitive populism. Serious attempt to extricate it will need more grids to trip.

First Published: Jul 30, 2012 20:34 IST