As the country embarks on planning for the 12th Plan (2012-17) period, a key question mark that hangs over the process is on the energy requirements.

Growth is energy hungry, and the aspirations of growing at 9-10% will place huge demands on the energy resources of the country. In this energy jigsaw, renewable energy will feature like never before in the 12th Plan and after.

Grid management: Pairing solar with gas, and wind with storage hydro can address the key issue of variability. Photo Hemant Mishra/Mint

As against this, capacity addition in the renewable energy based power generation has touched about 3Gw a year. In the coming five years, the overall capacity addition in the electricity grid through renewable energy is likely to range between 20Gw and 25Gw. Additionally, over and above the grid-based capacity, off-grid electricity applications are reaching remote places and touching lives where grid-based electricity supply has miserably failed. Newer applications in lighting, heating and household applications are now reaching a point of “unconditional competitiveness”. All of this is at a substantially lower carbon footprint. Renewable is thus no longer “alternative energy”, it is pretty much as mainstream as it gets.

The bottlenecks to renewable energy development are more practical. The nature of “infirm” electricity from renewable sources is somewhat different from conventional coal, gas or nuclear power. Large-scale ingress of such infirm electricity in the grid causes grid management problems. A utility control room becomes a much more complex and busier place as the proportion of renewable electricity increases. There is a natural reluctance on part of utilities to take in renewable electricity beyond a point.

Electricity is not merely a vehicle for prosperity, it also holds the key to quality of life. It touches the life of every citizen in any society, and its absence provides a huge political space to state as well as non-state players. Its future depends on the pursuit of sagacious policies by government at the central, state and local level, by the industry supporting it, the regulators, and the citizenry.

Little wonder that its availability and price are highly emotive issues. There is also an increasing tendency to take its continued availability, preferably free, or highly subsidized and totally insulated by cost inflation, as a fundamental right, and not as a business.

In the closing years of the last century, it could have been appropriately said that the power sector in India was on the horns of a “trilemma”, riding on the three powerful competing forces of economics, politics and technology.

The dawn of the new century and millennium has literally pushed the sector on to “all fours” with the serious onset of the climate and sustainability debate. Today the sector is being pulled in equal and opposite directions by the forces of economics, politics, technology and sustainability. The sustainability of the sector is deeply dependent on environment and climate issues, availability of fuel and land, assured flow of appropriate revenue and innovative technologies and practices.

Many utilities still treat it as a business and technology as Thomas Edison saw it a century ago, without integrating the latest technologies and practices, and not seriously seeking to reinvent better materials and processes. With depleting fossil fuel supplies, increasing costs and climate concerns, the answer and the key to sustainability is the relentless pursuit of efficiency. At the same time, the paradigm shift in the concept of the power sector is that the traditional focus on generation, transmission and distribution must now include the consumer, and in relation to governance the government has now been largely substituted by the regulator.

For the sector to be sustainable, the consumer and the regulator have to be hugely proactive in matters relating to efficiency. In fact, it is they who must demand greater efficiency. The consumer will demand it if he is compelled to pay the appropriate price for sustainable power. The regulator will have to make it a cardinal policy instrument to facilitate and ensure urgent and mandatory investments on efficiency.

India is heavily dependent on coal-based thermal generation and will continue to do so in the foreseeable future, in the absence of affordable natural gas supplies and the slow start of the ambitious nuclear power programme, particularly in the wake of the Fukushima incident in Japan and nuclear liability issues.

Mumbai: The latest census data shows that little under one-third of India now lives in urban agglomerates. But are we ready for a rapidly urbanizing India? Are enough investments being made by both public and private sector in physical and social infrastructure of our cities to sustain this kind of growth?

An expert panel comprising Partha Mukhopadhyay, senior fellow at the Centre for Policy Research; Amita Bhide, associate professor, Tata Institute of Social Sciences; Sanjay Ubale, managing director and chief executive at Tata Realty and Infrastructure Ltd; and Gautam Chatterjee, principal secretary, housing, government of Maharashtra, debated “Building sustainable cities: challenges for a new and rapidly urbanizing India” at Mint’s “Clarity Through Debate” programme in Mumbai last week.

Cordelia Jenkins of Mintmoderated the discussion

On why we have not been able to plan our cities

Mukhopadhyay: It is very difficult to do planning when population of cities is growing at 5% and 7% per year. But notion of planning as we see today is a recent phenomenon. It started in twenties and thirties of last century by European architects, when Europe had already gone through phase of urbanization through dirty industrialization. That’s why notion of separation of residential areas from commercial, industrial and other parts came in. And they depended upon private transport to achieve this segregation. However, today entire notion has changed, there is much more emphasis on public transport and private transport... is not the paradigm on which we can build our sustainable cities.

In many ways planned cities are perfectly dysfunctional cities. If one takes the example of Chandigarh, if you take government out of it, Chandigarh will collapse in a day. But just outside Chandigarh, we have Mohali and Panchkula, standard Indian cities, chaotic but vibrant and acting as the engines of growth of our economy.

Ubale: Chandigarh, Bhubaneshwar are some examples of planned cities, but we considered urban as something bad and emphasis was given on improving conditions in rural areas. We completely neglected urban areas and hardly any support was given by state or Central governments. This neglect of urban areas has led to unplanned growth of urban areas. And now what we are doing is responding to the situation, but there should be much more proactive planning of urban areas. Government must consider this fact that rapid urbanization represents people’s aspiration for better quality of life.

The municipal corporation is the largest local body in Delhi with the responsibility of providing basic amenities. It also deals with solid waste management (SWM) through the traditional practice of collecting garbage at the household level, followed by dumping in bins and dhalaos (waste dump in a residential area), from where the waste is transported to landfills. Curiously, such a system does not provide for either minimization or recycling of the waste. In 2000, the Union ministry for environment and forests issued rules that introduced segregation into this chain so as to extract recyclables and reduce the total amount of waste to be disposed of. The impetus came from the fact that, since 1975, 20 sanitary landfills have been created, of which only three are currently operational, and these too are close to exhaustion. The capital is now faced with the daunting task of finding 100 sq. km of landfill space to meet its needs until 2050. This land is not available either in Delhi or in the neighbouring states.

Also See| Mountain to Climb (PDF)

In addition, there are no provisions for the informal sector, which constitutes the core of the recycling process. In 1996, the Municipal Corporation of Delhi (MCD) had 337 dhalaos and 1,428 dustbins, which were the sites where segregation and collection of recyclables took place. Now, under a new “green” policy, even these sites are being dismantled. There are no official policies for minimization, particularly for packaging waste. In fact, the real potential lies in the fact that over 50% of the waste generated in India is organic—which can be composted—and 30% is recyclable.

Officially, Indian waste is supposed to consist of 11% metal, rubber, textiles etc.; 5% paper and paper products, and 1% plastics by weight. But actual collection at kabadi shops (which trade in cast-offs) in Delhi indicates that paper and paper products are fast overtaking metals, while plastics are now almost one-third of paper.

With the increase in sources such as hospitals, nursing homes, laboratories, offices, electronic devices and industrial units, there is also an increase in hazardous waste in the city.

Since the local municipal authorities are unable to deliver the services, their tasks are being fulfilled by a more than 100,000 waste pickers who, if paid the minimum wage, would cost the city a minimum of Rs 1 crore every day. To make this workforce a part of the formal structure of waste management, it is necessary to conceive an alternative system of waste management.

Such a system has been proposed by the waste pickers themselves, who have asked for space at each dhalao for six to 10 waste pickers engaged in door-to-door collection and segregation at source.

The organic waste could then be processed by them in local compost pits and sold in local markets for use in parks and gardens. The recyclables could be transported by small kabadi associations on cycles or rickshaws to big kabadis and recycling units. That only leaves 20% of the waste for eventual disposal at landfills.

Such a system is manifestly logical, eminently doable, and can result in significant reductions in land and energy costs and in pollution and emissions of greenhouse gases. All it entails is recognizing the social and economic value of the work of waste pickers and providing them with identity, space and credit.

However, this legality is exactly what frightens the babus of the corporation and they would much prefer the privatization of waste management so that the higher profits can be equitably distributed among the conglomerate of decision makers, technocrats and corporate firms. Believe it or not, this is precisely what “corruption” is all about!

Dunu Roy is the head of Hazards Centre in New Delhi.

New Delhi: As urbanization gathers pace in India, cities are generating increasing amounts of garbage, posing a challenge to municipal authorities for its efficient disposal and recycling.

This is nowhere more evident than in the national capital, which has the dubious distinction of being the largest producer of municipal solid waste in the country, generating 8,000 tonnes of it daily.

As much as 15-20% of the garbage can be recycled, according to a study by Chintan, a non-profit organization working with ragpickers in the city.

Delhi has some 80,000 waste pickers and recyclers, who make up an informal recycling sector. If they were to be employed by the municipality and paid minimum wages, it could cost the city at least Rs 15 lakh daily, Chintan says.

To avoid this expenditure, authorities have divided the city into six zones and have handed out contracts to private firms to collect and dump garbage.

“The private companies are competing with the informal sector since the only waste available as of now is from the waste pickers,” said Bharati Chaturvedi, director, Chintan. “Through privatization, at least 1,000-1,200 waste pickers will be impacted.”

Ramky Group and SPML Infra Ltd are among the private companies that have been signed on by the New Delhi Municipal Council to collect and carry garbage to various landfill sites. The firms are not responsible for segregating the waste.

“Not only will this impact the people and the environment severely, but this decision to privatize waste management is myopic on the part of the government,” said Gopal Krishna, spokesman of Toxic Links, a non-governmental organization that works to increase awareness on the environment and waste management.

The disposal firms disagree.

The current system guarantees a single-point responsibility of managing the entire gamut of municipal solid waste activities by a single operator, said Tariq Siddiqui, deputy general manager, corporate communications, SPML. “This leads to more accountability and better efficiency due to effective utilization of resources and technology.”

The Pune example

Activists and planners say Delhi could learn some lessons from Pune, the fastest growing city in Maharashtra after Mumbai, which has managed to streamline waste collection, segregation and recycling.

The Pune Municipal Corporation in 2000 collaborated with an association of ragpickers and waste collectors—Kagad Kach Patra Kashtakari Panchayat (KKPKP)—to form Swach, a collective of waste collectors responsible for collecting household garbage from doorsteps. The city generates 1,400 tonnes of garbage every day.

The collective segregates the waste and recycles whatever it can from this and sells it for a profit. There are now 5,500 registered waste pickers in Pune’s municipal area of some 240 sq. km, of which 1,836 collect waste from door to door. Residents pay Rs 10 a month to the collectors.

“The waste collectors provide a service to the city and assist the municipality,” says Lakshmi Narayan, general secretary, KKPKP. “They are extremely knowledgeable about waste management and segregation practices.”

Pune now aims to move towards a zero-waste model where all waste generated within a particular district or ward is disposed of within that area by using it as compost or bio-gas, according to Narayan.

For the municipality, the agreement with KKPKP enabled it to bypass privatization and at the same time improve its solid waste management through a community that lived on the margins of urban society.

To be sure, the unique initiative was not without its bottlenecks. For instance, residents in some city neighbourhoods refused to pay Rs 10 a month to the waste collectors, who then declined to collect waste from their doorsteps. Municipality officials stepped in and resolved the issue through community meetings.

There are some wrinkles in the system. For instance, in many households, the valuable recyclable waste may be picked up the domestic help and the ragpickers won’t get enough recyclable material to make money.

Policy of exclusion

Instead of adopting the Pune model, where a marginal community was brought into the social mainstream, Delhi has turned towards privatization and the exclusion of ragpickers, some activists say.

“In an attempt to increase tonnage, these companies transport as much waste as they can without segregation,” said Shashi Pandit, secretary, All India Kabadi Mazdoor Mahasangh, an association of ragpickers in Delhi. “Not only do they make more money this way, but they also take away the recyclable material from the ragpickers.”

Activists are also opposed to burning or converting the waste into energy, which the ministry of new and renewable energy is promoting.

All private companies get a subsidy of Rs 2 crore for generating 1 megawatt of power through converting waste, according to Krishna of Toxic Links.

Household waste in India has a low calorific value—between 700 and 1,000 kilocalories—which is unsuitable for thermal technologies such as incineration and converting waste to energy, according to a Chintan study.

Incinerators have been shown to emit more carbon dioxide per MW-hour than coal or gas-fired plants, Chintan said. Besides, burning the waste also releases dioxins and furans, which can cause cancer.

The waste-to-energy initiative is a recipe for disaster, Chaturvedi said. “The impact will be at multiple levels and the problem extends beyond waste collection.”

nidhi.m@livemint.com

Cities in India continue to attract millions of rural migrants looking for a better future. Within the first half of the 21st century, India will witness the largest migration in human history combined with the natural growth of cities, larger even than China’s. In the clamour created by the size and scale of urbanization, we lose sight of the fact that people don’t live in “abstract” cities, they experience their lives in neighbourhoods, outside the homes they choose to rent or buy, in the streets where they walk or drive to drop their children off to school, or get to work, and at the markets where they shop for groceries. How India copes with urbanization will ultimately be about the details.

The tapestry that holds these details is what we call today, the master plan (the nomenclature itself is inappropriate, but this can be the topic for another discussion). A well-made and implemented master plan is responsive to the needs and aspirations of all its residents, rich and poor. It works at multiple levels—from the development of the city region down to the neighbourhood, attracting businesses and jobs, ensuring easy access to education, healthcare, affordable housing, providing for adequate public transport and pedestrian-friendly streets, building convenience, community and culture into every neighbourhood.

Unfortunately, we are not harnessing the true power of the master plan. This is partly because currently the master plan does not contribute meaningfully in shaping the future of the city—instead the possibility of the master plan is trivialized into dictating land-use/FSI (floor space index, which defines how much space a building can occupy on a plot of land)/setback (or how far back a building must be from the front boundary of the plot), and the only relevance of the plan to any individual or enterprise is “what can I build and how much can I build”. It is also partly because there is no collective ownership of the master plan. A vibrant master plan is not a singular act of inspiration by a planner working in isolation. Rather, it is the product of a well-designed process that is systematically followed with discipline. This process is highly technical and data driven; it is also participatory and takes form over multiple iterations, to eventually produce a collective vision that is translated from lofty ideas to a physical space.

Indian cities are precariously perched on a precipice of rigidly regulated master plans, on the one hand, and completely uncoordinated free-for-all growth, on the other. The result is visibly evident in the chaotic growth of our cities and in the discordant, makeshift nature of public infrastructure being built, all merrily ignoring the master plan. The first step towards unloading the weight of past habits is for planners within government to acknowledge the failure of current plans and policies, instead of pretending otherwise.

The cities of Chandigarh and Gurgaon are a study in contrast.

The former, planned and designed by Le Corbusier, was built on an area of 114 sq. km for a population of half a million. Prime minister Jawaharlal Nehru, one of the key architects of modern India, had wanted cities such as Chandigarh to be the symbols of India’s future: “A new town, symbolic of freedom of India, unfettered by the traditions of the past, an expression of the nation’s faith in the future.”

Chandigarh derives most of its apparent cleanliness from having no space for the poor and its aesthetic harmony from devoting 2,000 acres of land solely for parks. Yet, say analysts, it remains a sterile and heavily subsidized city that encourages neither entrepreneurship nor tax-generating jobs.

In 2008, the planned city of Chandigarh failed to attract companies that manufacture parts of air-conditioned buses for its pilot project of 17 air-conditioned mini and five double decker buses floated by the Chandigarh Transport Undertaking (CTU). Despite the CTU filing a retender application, only two companies applied evinced interest.

Accidental city

In contrast, Gurgaon was an accidental city—the new face of cities in the 21st century India, unlike what Nehru had envisioned, erratic, unplanned, sporadic and lacking in infrastructure, yet functional. In 2003, Gurgaon was named the Millennium City owing to its exponential growth post 2000.

Interestingly, Gurgaon had a plan on paper dating back to 1966. It went nowhere till after the establishment of Haryana Urban Development Authority (HUDA) under the HUDA Act in 1977. One of the first major changes was the acquisition of land by Sanjay Gandhi to start an automobile company. The plot is now the Maruti Suzuki factory.

With the advent of private developers from 1981 onwards, the area experienced a great boom in construction activity when developers such as DLF Ltd began to acquire farmland along the Delhi border.

However, while Gurgaon was commercially functional, it is a city plagued by serious civic problems ranging from clogged roads and erratic power supply.

“Gurgaon sold dream houses and that was the end (and there was nothing more). A town has to have more than just beautiful houses, which Gurgaon lacks,” says Kavas Kapadia, head of the department of urban planning, School of Planning and Architecture. “But it also adds significantly to the revenues of Haryana.”

So the big question then is whether India can ever have a planned city that is also functional—a hybrid between Gurgaon and Chandigarh.

Bibek Debroy, economist and professor at Centre for Policy Research, says it’s difficult to have completely planned cities in India. “Gone are the days of greenfield cities that are built from scratch,” he said.

Chaotic growth

In his opinion, chaotic growth will continue since planning is difficult. To curb this kind of surge into cities, he said, “Ideally there should be no migration into the metros, and larger towns should be better planned so they would serve as bridges between smaller towns and metros.”

The growth of Gurgaon is synonymous with the IT industry and also due to its proximity to Delhi. This process got another impetus when industries based out of Delhi were forced to relocate to neighbouring areas such as Gurgaon.

Chandigarh on the other hand was largely dependent on Punjab for its economic development. And the growth of Punjab is largely a story of relative industrial stagnation.

To the problem of existing habitations, Debroy said that they should be better planned. “One has to look beyond the chaos and municipalities should be more empowered,” he added.

Simple prescription

Though the 73rd and the 74th constitutional amendments carry the simple prescription that rural and urban local bodies should be institutions of self-government, adherence to this provision has been downplayed and distorted, Debroy pointed out.

The problems of overlapping administrative powers is one of the reasons why Gurgaon has been unable to make any progress in providing adequate urban infrastructure.

The Gurgaon municipality established in 2008, functions amid ambiguity. Since the HUDA sectors are developed by HUDA, the old city is managed by the municipal corporation, and the developer colonies such as those owned by DLF are managed by the town and country planning department, Haryana.

“The state doesn’t want to lose its absolute control over Gurgaon. For any work with a budget of more than Rs 1 crore, we have to take up the case with the state government. This means that we are at the mercy of the government and bureaucrats,” said Yashpal Bharat, deputy mayor of Gurgaon.

Some say part of the reason why India is unable to create planned and functional cities is due to lack of clear delineation of administrative powers.

Kapadia is sure that India will have functional cities.

“If rules and controls are imposed, India will have cities that are not only nice to live in but are also functional,” he says.

“We need more rigid government agencies that exercise control so that public-private partnerships do not change the motive for growth into profit instead of planning.”

nidhi.m@livemint.com

India’s economic development is highly dependent on its water supply.

Although only 8% of the country’s total freshwater withdrawal is used for industrial purposes, the demand will grow significantly in the coming years.

The water requirement for industrial use will quadruple from the current 30 billion cubic metres (bcm) to 120 bcm by 2025, according to the World Bank. Better water management will therefore become a crucial success factor for firms in the long run. It also will help firms to manage the rising cost of water. Furthermore, India’s most productive industrial zones are located in water-stressed regions around megacities such as Mumbai and Delhi. Hence, industry-related water pollution, e.g. on groundwater, affects millions of people and jeopardizes the cities survivability.

Resource wastage: A file photo of the Ankleshwar Industrial area in Gujarat. Urban industrial water reusage is a crucial factor for India’s overall sustainable development. Photo Ramesh Dave/ Mint

The (water) wheel has not to be reinvented—it needs to be scaled.

Many industries have had to adopt water-recycling systems because of scarcity of water. Large Indian firms such as Maruti Suzuki India Ltd have successfully proved the financial feasibility of water-efficiency measures as part of their business processes. International companies, for example the German rubber producer Lanxess AG has invested in the latest waste water treatment technology in the construction of its new site in Jhagadia, Gujarat.

New Delhi: In the battle against India’s worsening water shortage, Indian industries have begun to transform the way they use and reuse their own water supplies.

They are responding to increasing pressure from water experts. At the 2011 Water India forum in New Delhi, Arjun Thapan, special senior adviser on water and infrastructure to the Asian Development Bank, called the situation in India “unremittingly bleak”, telling the representatives of industry gathered before him that they must change the way they use water if they want to avoid a “train wreck”.

“Frankly, I do not believe that India has a choice; it must reform,” said Thapan. “India’s demand for water in 2030 has been estimated in recent studies to be about double that of China’s: 1,500 billion cubic metres compared to 818 billion cubic metres in China.”

Conservation plan: A water treatment plant at the Maruti factory in Gurgaon. According to the company, water consumption per vehicle has fallen by 62% since the implementation of its water policy in the early 1990s. Pradeep Gaur/Mint

Other experts agree. In 2004, industry accounted for 22% of global freshwater consumption, according to the UNDP’s World Water Development Report of 2003. By 2025, that percentage was expected to double. Further, most of the increase in industrial water use is likely to happen in fast-developing countries like India. And as manufacturing industries migrate to developing countries, the pressure on the water sources of those countries will only intensify.

In the light of these facts, Thapan urged Indian businesses to respond enthusiastically to a “multi-billion dollar market which is largely unserved”. Major industry elements should develop on-site pre-treatment facilities to treat and reuse the waste they generate, he said. This would reduce the reliance on groundwater, a particularly stressed water source in the megacities and industrial zones.

Though progress has been slow, some manufacturers have made significant reductions to their water footprints. Car maker Maruti Suzuki India Ltd started a waste water programme in the early 1990s and achieved a zero-waste discharge by 2003. That means no water leaves the site in Gurgaon; all water used there, be it effluent, sewage or rainwater is cleaned and pumped back into the system.

As a result, the manufacturing plant can make some impressive claims. Water consumption per vehicle has fallen by 62% since the implementation of its water policy and deputy plant manager L.N. Rao said that the measures adopted have reduced fresh water consumption by about 35%.

The government and the industry must work in tandem if India has to grow in a sustainable manner, panellists said at a Mint conclave on sustainable industries, held in Bangalore on Tuesday. While the industry must ensure quicker investment in greener forms of power, such as wind and solar power, the government should put in place a policy framework that ensures solar photovoltaic cells and solar thermal cells become the norm than the exception.

The ‘Global Trends in Renewable Energy Investment’ annual report says this year that there has been a 32% increase in green energy investments, and for the first time developing countries have invested more in green energy than developed ones. You can invest in green technologies for about two years, and then recover it over a period of time. But what about companies that don’t have that kind of deep pockets. Will they be able to invest in expensive technology and still stay in the black any time soon?

Valluri: I take it back to the ’90s where shareholder value maximization at any cost was the primary aim. You had to deliver profitability quarter after quarter. There is a tipping point that’s come in the industry that shareholder value is important, but the question of whether you are a responsible company is important too. Responsibility leads to sustainability. Investments are needed. Companies that don’t make the investments will probably not survive in the future. While they deploy responsible technologies, they’ve to deliver shareholder value. Large companies that will lead some innovation will have to collaborate with smaller ones to develop that kind of technology.

Can you describe what is responsible technology? Coal is irresponsible in popular discourse. Does clean coal become responsible then? When does a technology become responsible?

Valluri: Over many decades in this century, we did not define any technology as irresponsible. It’s unfair to describe so, as we did not know anything beyond that. Now we realize that some of these technologies are not creating environmentally sustainable programmes. Now, we want to start bringing technologies like wind and nuclear. It’s a transition that has to be quicker, where investments need to come in. That’s what the industry has to grapple with, how to bring in these investments quick.

The March nuclear disaster in Fukushima in Japan led countries with nuclear power plants to revisit safety measures. The International Atomic Energy Agency constituted a global expert fact-finding mission to the island nation. The purpose of the mission was to ascertain facts and identify initial lessons to be learned for sharing with the nuclear community.

The mission submitted its report in June and the report stated in clear terms that “there were insufficient defence for tsunami hazards. Tsunami hazards that were considered in 2002 were underestimated. Additional protective measures were not reviewed and approved by the regulatory authority. Severe accident management provisions were not adequate to cope with multiple plant failures”.

Wake-up call: A file photo of the Tarapur nuclear power plant. The Fukushima disaster in Japan this year led countries with nuclear power plants to revisit safety measures.

For India, this is a lesson and an exceptional opportunity to relook at the protected structures of the department of atomic energy (DAE), and establish more transparent processes and procedures.

In the past, the Three Mile Island incident (1979) and Chernobyl accident (1986) had provided similar opportunities to evaluate nuclear safety and regulatory systems. India, in response to these incidents, constituted safety audits to assess the safety of nuclear power plants. However, A. Gopalakrishnan, (a former chairman of Atomic Energy Regulatory Board) in his recent article said, “DAE management classified these audit reports as ‘top secret’ and shelved them. No action was taken on the committee’s findings.”

If this is so, these reports, or at least action-taken reports, ought to have been published and made available. Such steps could have guaranteed DAE considerable public faith in the functioning of regulatory authorities and given significant confidence in engaging with stakeholders in the present expansion plan.

Nuclear Power Corp. of India Ltd, post-Fukushima has undertaken safety evaluation of 20 operating power plants and nuclear power plants under construction. The inm report titled Safety Evaluation of Indian Nuclear Power Plants Post Fukushima Incident suggested a series of safety measures that must be incorporated in all the audited nuclear power plants in a time-bound manner. Measures pertain to strengthening technical and power systems, automatic reactor shutdown on sensing seismic activity, enhancement of tsunami bunds at all coastal stations, etc.

New Delhi: Bottlenecks in the power sector threaten to slow the world’s second fastest growing major economy. India is set to miss even its lowered target of adding 62,734 megawatts (MW) of generation capacity in the 11th Five-year Plan period (2007-12).

Is there a way to bolster capacity and curtail transmission loss while keeping ecological concerns in mind? An expert panel comprising P. Uma Shankar, Union power secretary; Pramod Deo, chairman of the central electricity regulatory commission; Arup Roy Choudhury, chairman and managing director of NTPC Ltd; Shubhranshu Patnaik, senior director, energy and resources, Deloitte India; and Pawan Parikh, vice-president and head, power transmissions system, Siemens, debated ways of Providing sustainable solutions to India’s power crisis, at Mint’s Clarity Through Debate programme in New Delhi last week.

What really ails the Indian power sector?

Uma Shankar: First of all, let’s look at some numbers. The peak shortage used to be 16%-plus at one point of time, now we are down to sub-10%. We used to meet peak demand of 90,000MW in 2007 and now consistently we are meeting a peak demand of 110,000MW. Second thing is, on the energy shortage side, we used to have close to 10% shortage, but now we are down to 5-6%. These two are the major developments.

It is definitely true that the targets that we set for ourselves are not going to be met in that sense. But again, if you look at energy generation, it has increased over time. In 2007, we used to generate 660 billion units and now we are close to 810-plus billion units and this year we are looking at about 850 billion units. It is true that we set for ourselves a target of 78,000MW and then revised it to 62,000MW. But it is a question of what we set for ourselves. If you want to reach tree-tops, they say, you have to aim for the stars. On the positive side, we have more than 78,000MW projects under construction. Actual commissioning we have done for more than 40,000MW as of today. This is twice we did in the 9th Plan and 10th Plan. On capacity addition, we have definitely improved.

In the last two quarters, there have been concerns raised by policymakers, financiers and developers on emerging difficulties in financing projects in the power sector. Several global and domestic macroeconomic and sector-specific factors have combined to pose a grim picture for financing in general and analysts have begun to conclude that the power sector, too, is experiencing a significant credit squeeze.

Fault lines: The combined annual financial loss of distribution utilities is in excess of Rs 70,000 crore.Photo Pradeep Gaur/Mint

Inflation in India remains high, and monetary and liquidity conditions have remained tight over the past few quarters, reflecting in higher borrowing rates for corporates. This is not good news for the power sector, which is now feeling the double whammy of rising commodity prices and higher cost of borrowings.

Amid all this, the focus has also intensified on the bottlenecks in domestic coal availability and production, with environmental concerns and delay in evolving a robust policy framework for linkages/allocation of coal.

Added to all this is the bugbear of the Indian power sector —distribution inefficiencies, which are beginning to assume unsustainable proportions with combined annual financial loss of distribution utilities in excess of Rs 70,000 crore. Average aggregate technical and commercial losses reported at around 30% are still extremely high. The weak finances of distribution utilities have resulted in their inability to procure short-term power despite rising energy deficits and this has moderated prices in the power exchanges over the past year or so.

All the above factors have combined to enhance the risk perception of the sector among investors and financiers alike over the past two quarters with the result that fewer transactions/financial closures of power projects have happened than reported over the first half of FY11. It is easy to conclude in this environment that there are issues with regard to availability of finance for the power sector.

New Delhi: India’s power sector plans may come unstuck in the absence of adequate funding, according to top government officials, analysts and project developers.

The sector, which is struggling with funding shortfalls, will need an additional $400 billion (around Rs 18 trillion) investment in the 12th Five-year Plan period starting April 2012. The government is worried about the funding scarcity facing the power sector, which threatens to worsen an energy deficit that is seen as a key bottleneck in efforts to sustain and boost economic growth.

Even the Economic Survey 2010-11 had stated that sourcing the trillions of rupees needed to fund the country’s ambitious infrastructure agenda is a challenge and the government needs to tackle this with innovative ideas and policy interventions.

India’s power minister Sushilkumar Shinde admitted to funding concerns during the consultative committee meeting of the power ministry in June and said the estimated fund from all available sources is only Rs 6.4 trillion.

The concerns have been articulated by rating agency Fitch Ratings Inc. which said in a report that funding for new projects is “likely to continue to slow”.

“In recent months, private investment in infrastructure from debt and equity sources has slowed. Consequently, power sector investment may now fall short of targets... Bond market financing—even for operating projects—has been negligible... Fitch expects that a combination of sector specific risks, a rising interest rate regime, banks starting to close in on exposure limits, and the slowing down of equity funding will negatively affect the availability of funds to the power sector in the short to medium term,” the report said.

“Banks are now realizing the stretch on the fuel availability and the tariff concerns. Earlier, the banks were relying on letter of assurance (LoA) issued by the coal ministry. With Coal India Ltd not being able to serve the LoAs, the banks now are forced to look beyond the letters,” said Sanjeev Agrawal, managing director of Amplus Infrastructure, a power project developer.

The government plans to add 100,000MW during the 12th Plan to the current capacity of 174,000MW. The bulk of the 11th Plan targeted addition is coal-based, but the country is facing an increasing shortage of the fuel.

Shortage of fuel has widened to 40 million tonnes (mt) in 2010-11 from 4 mt in 2004-05. The power sector is the country’s biggest consumer of coal, absorbing 78% of local production.

Indian banks are also exposed to increased risk of defaults on loans to companies linked to the power sector. As mounting losses at state electricity boards (SEBs) and delays in the execution of new power plants have made recovery difficult.

SEBs across India are saddled with losses running into crores of rupees on account of power theft during transmission and distribution, billing inefficiencies, and, more importantly, because they have to buy expensive power to tide over short-term deficits. Some SEBs have also failed to revise tariffs for many years, adding to their losses.

“Fuel supply constraints, falling merchant power prices, environmental activism, land acquisition problems and the weakening credit quality of state electricity boards are all becoming increasing concerns,” the Fitch report said. “Elsewhere, rising interest rates could impact the viability of some projects and may even force the postponement of investment decisions.”

However, the government is trying to facilitate funding to the power sector. As part of this exercise, the government wants to make it easier to lend to the power sector by relaxing exposure norms for banks and state-run lenders such as Power Finance Corp. Ltd (PFC) and Rural Electrification Corp. Ltd (REC).

The power ministry has asked the cabinet committee on infrastructure to increase the exposure limit of banks, PFC and REC to single borrowers to 30% of their capital reserves from 25%. The central bank imposes limits on how much Indian institutions can lend to each sector or business group, restricting their funding ability.

“We are trying to facilitate funding to the power sector,” said power secretary P. Uma Shankar.

The government also plans on subsidizing the interest on loans taken by SEBs to cut distribution losses under the national electricity fund.

The beleaguered utilities are expected to avail Rs 25,000 crore worth of loans in the first two years. The boards will get a 3-5% discount on interest rates depending on performance, which will be paid by the federal government to the lenders.

The other measures to facilitate funding include a mandatory rating system for 65 state-owned distribution firms to streamline lending to them.

utpal.b@livemint.com

New Delhi: Have you ever wondered what happens to all the old mobile phones, laptops, television sets or monitors after you switch to new ones?

They usually keep lying in our homes for years, until we decide to do away with them. In most cases in India, the waste collector, the kabadiwala, is the easiest way to get rid of such items and it may even fetch a nominal price. But, what happens to those electronic equipment after they leave your house?

Health hazard: Plastic waste for recycling at Mundka village on the outskirts of Delhi. Photo Ramesh Pathania/Mint

Consider an example of a desktop that is pushed down the informal chain. After passing through many hands, it reaches the dealer who specializes in electronic waste, where it is broken down into several parts.

First, the plastic and metal are dismantled from the exterior of the monitor and the central processing unit (CPU) along with the the knobs and controls of the keyboard. The material recovered is sold on to metal and plastic scrap dealers, respectively. Then it becomes more complicated and, therefore, sophisticated.

The printed circuit board, or the motherboard as it is commonly referred to in the case of computers, has several components connected to it. Each of them is taken out separately, dipped in hot acid solutions, and various elements (mostly copper) are extracted. Some of the pins used in motherboards are also gold plated, from which gold is extracted. Sometimes, even metals such as platinum are found in very small quantities inside these components.

After various levels of refinement to remove the impurities, the useful metals are taken out and the rest is junked. Other components, such as the glass from monitors, are removed separately and the wires are either burnt or dipped in acid to take out copper and aluminium.

According to experts, these substances find their way through an organized channel in places such as Moradabad (famous for brass, which is an alloy of copper and zinc), Meerut and Firozabad (known for its glass industry) among others. The Seelampur area in Delhi is in fact a hub for e-waste where these equipment are first dismantled.

“Electronic equipment is in itself not hazardous but when they are broken down, that’s when the hazard aspect becomes a problem as toxins are leaked into the environment,” said K. Srinivasan, secretary, of lobby group Elcina Electronic Industries Association of India. “There are two aspects to this problem—the economic and the social aspect.”

New Delhi: On Christmas day in 2009, former environment minister Jairam Ramesh gave several industrial clusters in Maharashtra, Punjab and West Bengal an unpleasant surprise. He said 85% of India’s industrial clusters were so polluted they couldn’t be allowed to expand unless they cleaned up.

The report that prompted Ramesh’s action was prepared by the Indian Institute of Technology, Delhi, and the Central Pollution Control Board. It found that 10 industrial clusters scored at least 80 out of 100 in a pollution index, or were emitting effluents and pollutants at an alarming level; 33 scored between 70 and 80 (critically polluted); and another 32 scored between 60 and 70 (seriously polluted).

“The high levels of pollution and its relation with public health is a serious concern”, Ramesh said.

New mechanism: A file photo of a sponge iron unit. Under the proposed emissions trading scheme, the limits on the industrial pollutants will be set by the states and this cap is expected to help in cutting pollution levels at lower overall costs of compliance.Photo Indranil Bhoumik/Mint

“There is no question that the polluter must pay, and pay heavily,” said Feroze Mehta, an environmental lawyer, with the Environment Law Forum. “Fines alone lead to corruption. There has to be more creative ways, better and continuous monitoring for instance.”

Taking a cue, Tamil Nadu and Gujarat announced last year they would soon have India’s first domestic emissions trading scheme, which will be tied to air pollution. A cap on air pollutants will be set by the respective state pollution control boards as a pilot for the rest of the country for six months.

In the proposed scheme, a ceiling on emissions of a certain pollutant is set, based on its desired concentration in the atmosphere. The government then issues or auctions free permits to industrial units in accordance with the amount of pollutants they are allowed to emit. If the plant exceeds the level, it has to buy these permits from others and vice-versa. The limits on the industrial pollutants will be set by the states themselves in consultation with the Central Pollution Control Board. Similar to the carbon market, the cap will help in lowering pollution levels at lower overall costs of compliance.

This will allow the regulator to set a cap on the aggregate level of pollution permitted, and then allow a self-regulating system to ensure that pollution does not exceed this cap. A system of credits that can be traded is most commonly used for industrial units falling above or below the pollution limits.

Limited impact