Krittivas Mukherjee and Hiral Vora, Reuters
Mumbai: India’s financial hub of Mumbai is threatened with its first power cuts in decades, underscoring the depth of a power crisis that is crimping the country’s economic potential.
Mumbai, which aims to be a global financial centre, might have cobbled enough supply together to keep its air-conditioning and fans on for now and avoid the hours of blackouts suffered daily by its outlying areas, as well as other towns and cities.
But to highlight the problem’s urgency, power supplier Tata Power Co. Ltd has urged Mumbai citizens to cut down air-conditioning use, change light bulbs and put computers on sleep mode to conserve energy.
“This is a wake up call for India. This city was long an island of stability,” said V. Raghuraman, energy adviser to the Confederation of Indian Industry (CII).
“It shows India’s piecemeal strategy for dealing with power shortages can’t go on forever.”
India, which has a population of 1.1 billion and rising, has suffered power shortages for years, especially in the peak summer months when temperatures in some parts of the country can reach more than 45 degrees celsius (113F).
But an economy which has grown at about 9% for two years and an expanding middle class are hotting up demand for electrical goods as well as malls, air-conditioned homes and offices, which are springing up across the country.
Even the capital, New Delhi, is not immune to long cuts, forcing the city’s chief minister to threaten power firms with fines. Gurgaon, an IT hub near New Delhi, suffers up to four hours a day of cuts that have sparked protest from residents.
In the eastern city of Kolkata, 2 million customers live without power for up to eight hours a day, worse than two to three hours of previous years. Villages often spend half the day cut off as their power share gets diverted to factories and offices.
“This in an annual problem, but this year the problem has been even more acute,” said Harry Dhaul, of the Independent Power Producers Association of India.
Beg, Borrow and Light
India’s energy shortfall touched 9% last year and at peak times the gap between demand and supply was nearly 14%, the Ministry of Power said. It was the largest shortfall in nearly 10 years.
The government plans to expand thermal and hydroelectric projects, which account for the bulk of India’s energy supplies, and hopes to boost energy efficiency to keep the insatiable demand for energy below economic expansion.
But new projects may not be able to cope with soaring demand, growing at 8% to 9% a year. The government plans to add more than 78,500 megawatts of power generation capacity by 2012 on top of India’s current 85,000 MW capacity per year.
India’s total installed capacity is more than 128,000 MW, but only three-quarters of that is available at any given time, with per capita consumption at 615 kilowatts per hour, a quarter of the global average.
For Mumbai, which has enjoyed priority power supply because of its critical financial role, Tata Power is planning two power projects to generate a total of 7,000 MW in western India.
But experts say India’s power problems will not go away any time soon.
“Any capacity increase has been negated by growth — and the economy is galloping,” Dhaul said.
Raghuraman of the CII estimates power cuts and the high cost of diesel-fired generators skim 1.0-1.5 percentage points off India’s economic growth.
Red tape, widespread power theft and a maze of different state regulations have also bogged down new projects.
Farming, which consumes about 20% of the power generated and receives subsidies from states, is becoming more mechanised, leading to higher demand.
To bridge the gap, Mumbai’s power regulator has asked utilities to buy from other states and scheduled cuts outside the city, known as load-shedding, have gone up.
“It’s still not peak summer and so far the government has managed by begging and borrowing power from other sources,” said Sailesh Kumar Dixit, an automobile parts dealer whose plush Mumbai home is kept cool by five air-conditioners.
“But we wonder how long they can avoid load-shedding like this and when that happens business will suffer.”
The case of Mumbai has been worsened by the shutdown in 2001 of a $2.9 billion plant, built by the collapsed U.S. giant Enron, after a payment dispute with the state utility.
Continued disputes with the new owners have stopped the plant coming online — an example, say critics, of how India’s red tape holds its development back.
“In the next 25 years, even if we are able to raise our installed capacity by five to six times, the shortage situation would continue,” said R.V. Shahi, a former federal power official.
— Additional reporting by Bappa Majumdar in Kolkata and Alistair Scrutton in New Delhi