People are feeling more heat than electricity due to deregulation of power sector

July 2006 - December 2006 Index

People are feeling more heat than electricity due to deregulation of power sector - BS Meel

To attract private investment in Power sector, Govt. of India introduced new power policy on 23^rd October, 1991 but nothing happened substantially. Further to accelerate the construction of new power plants, in order to add 1,00,000 MW, the government of India adopted in year 2003, a new electricity law aiming at power for all by 2012.

In the meantime our country in general and northern states in particular are reeling under systematic cuts of current of very big scale, even in the capital city New Delhi sometimes even after sun set, which entails grave economic damages in all branches of industry, an intolerable situation for consumers thereby life becomes miserable for them, when they are paying for irritant third world electricity supply, the exorbitant first world electricity rates. All these elements illustrate the total failure of the deregulation of electricity in India.

The originally conceived target for the tenth plan was 59,000 MW and subsequently approved was 41,110 MW. After mid-term appraisal it has been lowered to 34,000 MW. Even with the reduced target of the plan, the actual capacity addition was only 14,300 MW in the first four years of the plan. In the last year there is a prospect of hardly 17,000 MW being commissioned but as indication stand, it is going to slip as barely few months only to go before the tenth plan comes to close. This typifies the gap in the ability of the country to add adequate capacity as envisaged. Thus tenth plan achievements after four and half years past are less than that of seventh or eighth or ninth plan achievements. It is a decline over the last plan and overall performance is dismissal.

We are supposed to have introduced power reforms. The Electricity Act, 2003 (repealing old laws) should have enabled the addition of generation capacity because of captive generation. The Securitisation of state electricity board (SEB) debt to government-owned electricity generating companies should have freed up capital for investment and payment terms by letters of credit should have been an incentive for adding new generation capacity. The private sector should have added substantial new capacity. None of this has happened.

Pit fall:

Until the distribution system demonstrates its capability to pay, we will see little change. The power utilities, the state electricity regulatory commissions, the state governments and enterprises are in semblance. The central government could not compel its generating companies to add the capacity in line with permitted debt-equity ratio. The states do not have the resources. Tariffs remain highly politicized and sensitive. The state power utilities toe the government line and did not prefer the proposals for tariff hike as required by rising costs. The role of SERC is also lukewarm. Since as our experience in A.P, Punjab, &TN says the state governments has to re-introduce free power to agriculture consumers as well as the experience of Delhi and Rajasthan demonstrates that the state governments were forced to role back the tariff hike due to unaffordability. Therefore it appears that the state governments will not support hike in tariff fixation nor can exert to provide subsidy support due to lack of resources as well as insignificant improvements in efficiencies in distribution segment, lack of will power to tackle the theft being the main bottleneck. Distribution companies will continue to loose money and hence will not privatised. Caught between the devil of state power utilities immune with the political interference by state governments and deep see of privatisation, the state government simply bank upon the central government aid. As long as this situation continues little additional investment will come from the state. Private investment albeit tardily due to electricity Act,2003 being implemented. The major deterrent in achieving this figure is the inability of state power utility to reach an agreement with power developers (private investors) on payment security. This has been the biggest roadblock during tenth plan.

A plague of power blackouts raises doubts about the reliability in near future even after commissioning of national grid. It is not temperature records that are being smashed by nationwide heat wave, significant bits of northern regional grid electricity power supply system are breaking across too. Meanwhile in Northern region where occasional blackouts have been a fact of life. People have suffered sporadic power cuts during some of the hottest days of the year. People are feeling more heat than electricity and how effective this will be, only time will tell. Ordinary citizens, for one thinks Indians will just have to get used to power cuts. The continuity, reliability and quality of electricity supply is deteriorating year by year since introduction of new power policy in the year 1991. Not only the consumers are on receiving end but electricity employees had been also subjected to curtailment of their incentivise and terminal workloads has been increased on them. To correct this situation it is imperative upon the employees to initiate steps to develop vigorous struggle against the power policy by launching awareness campaigns among people in general and employees in particular.


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