What do a resident of Sushant Lok in Gurgaon, on the outskirts of New Delhi, and a farmer in Vidarbha, Maharashtra, have in common? Both are dependent on the quirky Indian monsoon for their individual needs.
Many deterrents: India has had a history of capacity-addition setbacks for reasons as varied as delayed investment decisions, contractual problems, resistance to land acquisition, geological issues and natural calamities. Ramesh Pathania / Mint
While the resident of the posh locality in Gurgaon, which styles itself as the millennium city, needs power to run his air conditioner to beat the heat, the Vidarbha farmer depends on the monsoon to water his crop.
Monsoon rains between June and September account for nearly 80% of the annual rainfall over the country and are vital for the economy, being the main source of water for agriculture and hydropower generation.
Even after 62 years of independence, electricity generation depends on the whims of the rain gods as thermal power generation falters. Combined with the limited addition of new power producing capacity, this has resulted in severe power shortages across the country.
“In most of the sectors, we have been able to figure out solutions to resolve the problems. Given the socio-political issues and the complexities involved in implementation, (the) power sector is yet to meet the people’s expectations,” said Sanjeev Aggarwal, managing director, AES Chattisgarh Energy Pvt. Ltd, which is developing a 1,200MW coal-based power project in the central Indian state.
India’s per capita consumption of electricity is only 700 units, compared with the world average of 2,600 units. It still faces a 12% shortage of power during the peak hours between 5pm and 11pm. To make it worse, India’s track record in adding power generating capacity is poor: In the five years to 2007, the country added 20,950MW of capacity, against a target of 41,110MW.
Towering losses: A power line near Gurgaon. Around 30% of the power generated is lost because of inefficient transmission and distribution. Ramesh Pathania / Mint
India plans to add 78,577MW by 2012, but as Mint reported on 28 August 2007, it could miss this target by up to 60% because of a shortage of equipment and contractors. There has been a history of capacity-addition setbacks for reasons as varied as delayed investment decisions, contractual problems, resistance to land acquisition, geological issues and natural calamities.
“Around 60% of the 11th Plan equipment orders are placed with us, with the balance placed with others. We are confident about making these deliveries, but we cannot promise about others,” said K. Ravi Kumar, chairman and managing director, Bharat Heavy Electricals Ltd, India’s largest power generation equipment manufacturing firm.
The pitiful performance notwithstanding, top power sector officials are still hopeful about delivering on the promise.
“We will achieve all the targets in this Plan. However, in power generation, there is a slippage of around 6,000MW on account of fuel problem, such as coal and gas. We expect some captive power generation capacity coming in, which will make up for this slippage,” Sushilkumar Shinde, Union power minister, told Mint.
Fuel supply issues have become common. Coal, which accounts for almost 70% of the power generated in the country, has become a scarce commodity today, with the average coal stock at power stations available for only 10 days of consumption against a stipulated requirement of 22 days. The problem is expected to become worse as 46,600MW of India’s new capacity by 2012 is expected to come from coal-fired plants.
Generation is not the only area of concern. The transmission sector requires an investment of Rs1.4 trillion for increasing the inter-regional capacity from 19,750MW to 38,000MW by the end of 2012.
“For state electricity boards (SEBs), tying up funds for transmission projects is difficult. The problems for PowerGrid include getting the right of way for setting up transmission links and securing timely forest clearances. Law and order situation in areas such as Jharkhand, Chhattisgarh, north-eastern states and Jammu and Kashmir is also a problem,” said J. Sridharan, director, finance, Power Grid Corp. of India Ltd, India’s leading transmission company.
In the distribution sector, SEBs are running up huge losses. The SEBs of Andhra Pradesh, Gujarat, Karnataka, Rajasthan, Haryana, Punjab and Maharashtra depend on subsidies, which in some instances are as high as 25% of the annual power revenues accruing to the state.
Around 30% of the power generated is lost because of inefficient transmission and distribution. SEBs have been unable to replace or even repair substandard distribution equipment, such as transformers, for lack of finances.
“There is no short cut to this. The problem will be here for a long time. People have lost the will to reduce the losses. What is needed is commercial information transparency as opposed to administrative transparency, which schemes such as (the) restructured Accelerated Power Development and Reform Programme (APDRP) are attempting. The Electricity Act, 2003, has not allowed retail competition, which would have propelled the distribution sector,” said Anish De, chief executive of Mercados EMI Asia, an energy consulting firm.
The ruling United Progressive Alliance’s much-touted promise of electricity for all by 2009 made in 2004 remains a distant dream. The Centre is worried as both APDRP and a rural electrification programme named Rajiv Gandhi Grameen Vidyutikaran Yojana have fallen short of their targets.
However, some experts don’t agree that the schemes have flopped.
“We can’t say that these schemes have not worked. They have not worked to the point that we have targeted,” said R.V. Shahi, former power secretary and chairman of Energy Infratech Pvt. Ltd, an energy consulting company.
In the 10 years of the eighth and ninth Plans, hardly 20,000 villages were electrified, he said. In the 10th Plan alone, the number almost doubled to 40,000 villages. Under APDRP, states such as Andhra Pradesh, Gujarat and West Bengal benefited by reducing transmission losses in a large number of towns and cities.