Concerned that the growing shortage of power will derail the Indian economic engine, Prime Minister Manmohan Singh has called a meeting of state chief ministers on Monday to discuss the problems ailing the sector and possible solutions.
The meeting comes as the Indian summer peaks and several states, including Maharashtra, suffer power cuts of several hours a day due to demand-supply imbalances. It also comes in the background of the failure to meet the target set for additional power generation capacity in the five years to 2007.
“The conference has been called as there is a growing need for power generation capacity addition in the country. Since power is a subject in the concurrent list (the central government and state governments are both responsible for it), we cannot do much without the state’s active participation,” said Union power minister Sushil Kumar Shinde.
India currently has the capacity to generate 128,000 mega watt (MW) of power. It will likely need more to fuel an economy that is estimated to grow at over 8% in 2007-08. In the 10 Plan (2002-07), the government had targeted adding 41,110MW but could achieve only about half that amount. “We have failed during the 10th Plan period and through this meeting we want to plan ahead for the next five years so that we are ready in advance,” said Shinde.
The Prime Minister and the chief ministers will discuss issues related to power generation, reduction of losses in transmission and distribution sectors, promoting competitiveness in the electricity market through open access, rural electrification and energy conservation.
The biggest problem that the sector faces is the huge average transmission and commercial losses (AT&C) loss, which is around 40% of the power generated. This means that out of 100 units of power generated, 40 are lost due to theft and pilferage. The Union government wants the state’s to reduce these losses to around 15% or lower. “No system anywhere in the world can absorb these kinds of losses. We will try to prevail upon the states to understand this viewpoint and work together to reduce them, said A.K. Razdan, power secretary.
In a report on the power sector titled “India Energy Outlook 2007”, audit firm KPMG estimates that India’s energy needs will grow 400% over the next 25 years, assuming an average gross domestic product growth rate of more than 8%.
Of the $150 billion expected to be invested in the Indian energy sector over the next five years, the power sector alone will need close to $100 billion, including investments in generation, transmission and distribution (the bulk of the investments will go towards generation). In the current Plan period (2007-12), the power sector is expected to fall short of its required investment by around Rs4,50,000 crore as reported by Mint on 17 May.