BackPower crisis: Dark days in Tamil Nadu
The power crisis is extracting a human toll that goes beyond falling industrial output and rising generator sales
Premium(S.D. Subbu/Mint)
Chennai: Bangalore-based finance professional Lakshminarayana KR was scrambling to book a flight to Coimbatore for his family to attend the funeral of his maternal uncle, who died at the age of 72. As it turned out, the family didn’t need to catch that flight.
The final rites of his uncle, who lived alone and died suddenly at 8:30am on one January day, had to be performed in a hurry before the scheduled power cut for the day shut down the local crematorium. Lakshminarayana’s family wouldn’t have been able to make it to Coimbatore in time for the funeral so they decided not to go.
“My mother really wanted to be there, and so did all of us," Lakshminarayana recalls. “The crematorium said because of power crisis it had to shut down at 11am. The only way we could have got there and performed all the rites was by pushing the cremation to next day, but the Coimbatore weather would not permit us to keep his body for another day."
The anecdote is a small example of the impact Tamil Nadu’s power crisis—a sort of protracted blackout that has dragged on for over two years—is having on ordinary people. Whether keeping relatives from attending the funeral of a beloved uncle or separating families and wrecking entrepreneurial dreams, the crisis is extracting a human toll that goes beyond falling industrial production, rising generator sales or people missing television soap operas.
This is most evident in Coimbatore, a city with hundreds of small factories that make anything from metal castings to kitchen-top grinders, many of them turning defunct because of the acute electricity shortage. Such as Sri Babu’s tool machine shop.
A migrant to the city from neighbouring Palakkad district in Kerala, Sri Babu set up his shop in 2008 by pledging his wife’s jewellery, and was making a profit of ₹ 10,000-15,000 a month. When the power outages began, extending from two-three hours daily to five-six hours a day in 2010, he managed to run his 300 sq. ft shop by working nights. But the situation turned worse last year with the power cuts stretching up to 16 hours a day. His orders got cancelled and his workers quit. Babu shut his shop.
The turn of events hasn’t been easy on his family or him. Babu sent his wife and three-year-old daughter back to Palakkad to stay with his parents, found work for about ₹ 9,000 a month, lives in shared accommodation, and is struggling to pay the interest on his ₹ 3 lakh loan. The biggest blow has been to his pride. “It was hard to go ask for a job, but I have debt over my head and a family to feed," Babu said in Tamil, a language acquired after he moved to Coimbatore 18 years ago.
Tamil Nadu faces an annual electricity deficit of about 4,000 megawatt (MW). This happened as the Tamilnadu Electricity Board Ltd (TNEB) failed to anticipate demand and implement new power projects, said Amol Kotwal, associate director, energy and power systems practice, at consultancy Frost and Sullivan. The state has added a mere 330 MW of power generation capacity since 2005, whereas demand has escalated by almost 10 times.
Besides, successive governments in Tamil Nadu have resisted increasing tariffs in tandem with rising power costs and even given away free supply, resulting in the power deficit state being unable to buy costly electricity from private utilities. According to TNEB estimates, 11 billion units worth ₹ 6,600 crore were given as free power annually to farmers, armed forces, small power loom handloom, among others each year, but until 2011, the utility was compensated only ₹ 250 crore towards the subsidy.
Struggling to cope with this twin failure, among others, are Tamil Nadu’s 760,000 registered micro and small entrepreneurs and the 5.3 million people they employ.
Angel Jebastean, eyes bloodshot from working nights, says his wife left him two months ago, taking their 12-year-old daughter Angeline with her, after he had to shut his workshop in Coimbatore because of the long power cuts. The 46-year-old now works in a friend’s workshop for ₹ 5,000 a month, lives in shared accommodation, and has a debt of ₹ 2 lakh.
Several lathe machine workers in Coimbatore, like Babu and Jebastean, aspire to be their own masters after a few years of experience, and buy used machines to set up small shops, said J. James, Coimbatore district president of the Tamilnadu Association of Cottage and Micro Enterprises, that has 4,000 members in Coimbatore. After a few good years, these new entrepreneurs buy a few more machines on credit, mostly from local money lenders who charge exorbitant interest of about 5% monthly, because they typically don’t have the necessary papers or collateral required for a bank loan.
So when such small units are shuttered because of the power crisis, these entrepreneurs have no option but to return to low-paying jobs to be able to repay their large debts, said James, who runs a small enterprise JJ Engineering in Coimbatore. “2012 was the worst year as we witnessed 14-16 hour power disruptions, and small and tiny units do not have the financial muscle to run diesel generators," he said.
The uncertainty in incomes for small and micro entrepreneurs hurts their families in several ways, primarily affecting their spending on education and healthcare, said Nilanjan Banik, economics professor at the Institute for Financial Management and Research in Chennai.
By April 2016, based on projects planned by Tamilnadu Generation and Distribution Corp. Ltd (TANGEDCO) and TNEB, 4,500-5,500 MW of power generation capacity is expected to be added, said Kotwal of Frost and Sullivan.
The state government plans to add about 2,850 MW of power generation capacity this year, a TNEB official said.
But stable supply of electricity from these additions is uncertain because of the dearth of coal to fire thermal power plants, said D. Balasundaram, chairman, Tamil Nadu Electricity Consumers Association, Coimbatore.
Tamil Nadu leans heavily on renewable energy sources to augment its supply of power. The state already tops the country in terms of wind energy generation, with 7,000 MW contributing almost 40% of the total installed power generation capacity of 18,050MW as on March 31, 2012.
In October, Tamil Nadu also announced an ambitious solar power policy to generate 3,000 MW of solar power by 2015. The policy mandates large-scale power consumers such as special economic zones, software parks, telecom towers, colleges and residential schools to buy 3% of their total electricity requirement from solar power plants this year and 6% from January 2014.
So far, the policy hasn’t seen much response.
In December, when the government opened the bids for 1,000 MW of solar power projects, prospective developers had expressed interest only for 499 MW of those.
Solar power developers were wary of TANGEDCO’s history of non-payments, said Madhavan Nampoothiri, director of REsolve Energy Consultants, a Chennai-based solar consulting firm.
The loss-making state utility, despite providing letters of credit, hadn’t paid wind developers for about a year—at the end of fiscal 2012, it owed about ₹ 11,000 crore in arrears to independent power producers and other contractors.
Developers were also put off by the low proposed tariff, the onus of land acquisition being thrust on them, and the short time frame of eight months to develop a project, said Kotwal.
Until these issues are sorted, small and micro entrepreneurs in the state stare at an uncertain future.
“It is a matter of time before I would also have to down shutters like my neighbours," said N. Rathnaswamy, 49, who runs Techno Industries that makes wet grinders in Coimbatore’s Avarampallayam area. He has availed a bank overdraft facility of ₹ 50 lakh and pays ₹ 65,000 a month towards interest on loan, for which he has pledged his ancestral property.
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