Without re-igniting the power generation, India cannot achieve a rebound growth in GDP
About 300 million Indians still do not have access to electricity. The Electricity Bill, 2003, had promised power for everyone by 2012 but, like every other promise, this commitment remains unfulfilled.India’s progress from 1,300 MW of power capacity; in 1950 to the current 238,000 MW may create satisfactory impression until China reminds us of its progress from 2,300 MW to 1,200,000 MW during the same period. And, though India has an installed capacity of 238,000 Mw, this is not what is transmitted from power plants.
The country’s of 70 per cent only power load factor (PLF) allows 170,000 MW to be transmitted. And the combined transmission, distribution and commercial losses of 27 per cent make sure that 124,000 MW only – 52 per cent of the total generation capacity – reaches the consumers.
The power sector of India is facing its worst crisis today. Though the XIIth Plan’s (2012-17) power generation (already reduced) target of 88,000 MW assumes close to 70 per cent contribution from coal-based power, there seems to be no credible plan for the coal availability. At the current annual production level of Coal India (460 million tonnes, growing at 5 per cent) and current annual imports of 16$ million tonnes, India would still need 150-200 million tonnes of additional coal to achieve the plan. The coal scam has added even more uncertainty and made it impossible to achieve any decision relating to coal allocation, thus forcing many plants to remain idle, facing the prospect of NPAs and making some non-starters.
On the other side, the power distribution sector, with annual losses of £90,000 crore, is facing unprecedented bad time. Though the government has given interest moratorium to most state power distribution companies on condition of reduction in distribution losses and filing of regular price increase petition, the state politicians across the party lines are not playing the ball. Free power to agriculture, coupled with organised theft of power and mismanagement of distribution network, has brought the distribution sector to the verge of bankruptcy.
For most of hydro and nuclear projects, the environmental clearances have become impossible to achieve. The solar power sector has done better than other sectors, but its prices are still far above the prices of thermal and hydro plants. At the unit rate of Rupee 7-8, the government target of 20,000 MW capacity by 2023 from the current level of 1,000 MW reﬂects a huge subsidy of at least £50,000 crore per year.
Though the problems of power sector may seem insurmountable, actually all it needs is the political will and nothing more. The most critical issue of thermal power plants is availability of coal. The government should either privatize Coal India or make it solely responsible to meet all coal demand of the country, be it indigenous or imported. The role of power plants should be redeﬁned as a conversion plant, converting coal to power and let the earnings of power plants be limited to capacity charges (conversion charges) only. Freeing up thermal power plants from the dependence of coal will not only refocus entrepreneurs into building projects, but would also help Coal India to plan better.
Of course, the government should create a body for quality check on Coal India. All future thermal plants should either be located at pit heads or in coastal areas, to avoid unnecessary transportation of coal. Similar methods should be adopted for gas-based power plants too.
Looking at environmental challenges in putting up big hydro projects, the government should encourage mini and micro hydro plants by giving necessary encouragement/subsidy. Solar energy can become the saving grace for India. Like rain harvesting, putting solar panels should be made compulsory for every housing unit. This will not only improve the price points, but would also ease the power distribution and transmission infrastructure to a large extent. To encourage research in the area of solar energy, the government should set up “Centres of excellence’ for solar energy too.
It’s high time that the government should undertake a massive plan of privatisation of power distribution across states. The consumers’ experience is better and losses have been reduced, wherever privatisation has been introduced in power distribution – be it Mumbai, Kolkata, Delhi, Ahmedabad or Bhiwandi.
Power is the basic requirement of a country and its growth is directly linked to the growth in GDP. Every 10 per cent increase in power generation results in 7 per cent growth in GDP. Without igniting the power generation again, the country cannot achieve the much-talked-about rebound growth in GDP.