Dismal growth in recent years

Dismal growth in recent years

The Indian economy has to sustain around 10% annual growth for the next decade if it is to make a genuine dent on mass poverty. Can this growth rate be sustained without commensurate growth in the power sector? As a rule of thumb, the elasticity of gross domestic product (GDP) growth and the growth of electric power should be at the same level for a developing economy. Thus, the power sector should also grow at 10%. However, the performance of the Indian power sector in the past few years has been dismal and it has grown only at 5%. The demand-supply gap for electricity continues to widen. The peak power shortfall is 13-14%.

The power sector is highly misunderstood by laypeople, whose engagement with it is limited to switching on a light. The power matrix is as complex as the human body. In simple language, power plants are like the heart; the regional and national grids are the main arteries; the state transmission, sub-transmission and distribution networks are the various sub-arteries and veins. The human brain and the nervous system are paralleled by the load dispatch system. This is an organic network. Yet, while due care is being taken to bridge the demand-supply gap in power generation, we have failed to provide similar priority to transmission, sub-transmission, distribution and local area load management systems. The states have lagged behind in transmission upgrades, particularly in sub-transmission and distribution networks and local area load management systems. The result of incomplete state-level power reforms is that the transmission and distribution (T&D) losses that were supposed to be reduced from 35% in 2004-05 to 15% in 2012 are still at the 28.44% mark. Over five years, T&D losses have been reduced at the rate of 1% a year. This is patently not enough.

The much talked about public-private partnership model has failed to address issues of sustainable distribution except in a few major cities. The solutions are staring us in the face:

• Establish empowered institutions with appropriate human and technical resources.

• Adopt the smart grid mechanism, which will facilitate confidence building through a two-way communication between the user and the supplier.

• Energize rural India by establishing mini townships and non-polluting industrial units. This will make it remunerative for investors to modernize sub-transmission distribution networks. They will become commercially viable.

There are other issues to sort out. First, the spurt in infrastructure projects nationwide and the concentration of resources on Commonwealth Games facilities in New Delhi have affected the availability of skilled and unskilled manpower.

Second, as per the government’s policy of 2006, industrial projects require clearances from local panchayats. This is easier said than done. Power generation units are located within four walls and, essentially, one panchayat. Transmission and distribution networks pass through numerous panchayats, and this is a recipe for delay.

Third, the commissioning of generation projects is not matching schedules. This will affect the development of regional and national transmission networks. It can also have a cascading affect. If, as planned, the transmission system is opened for competition in 2011, it may only offer an excuse to the central utility for an even weaker transmission network.

R.P.Singh is a former chairman and managing director at Power Grid Corp. of India Ltd and executive vice-chairman of Jindal Power Ltd.