Powerless and lost
Power supply is one constraint, the more serious issue is India’s inability to pay for power.
The recent power blackout in northern India which affected nearly 500 million people should not be dismissed or misjudged. Analysts blamed delays caused by environment and forest clearance procedures. One of their favourite whipping horses is ‘free’ electricity to farmers, which is said to be crippling the state electricity boards. These explanations are naïve and mistaken. India’s power sector does need urgent reform but we first need to know what to fix.
Data analysed by the Centre for Science and Environment clearly shows environmental clearance is not an obstacle to power infrastructure. In fact, the pace and scale of clearances given to power plants in India pose danger to the environment. It is also incorrect that green clearances are holding up India’s coal production. Clearances have been readily given. The problem is that Coal India Limited is a monopoly player and sits on 0.2 million hectares (ha) of mine lease area, including 55,000 ha of forestland. Its reserves are some 64 billion tonnes but produces only 500 million tonnes per annum.
Secondly, the matter of ‘free’ power to farmers needs more enquiry. The recent report of the high level panel on Financial Position of Distribution Utilities finds huge anomalies in data used to estimate 20 per cent usage by the agriculture sector. Jammu and Kashmir, where transmission and distribution losses (T&D) are as high as 70 per cent, estimates that farmers use 28,000 units per pumpset; in Rajasthan, too, where losses are high, farmers consume 11,000 units per pumpset. But Tamil Nadu, with lower T&D losses of 15 per cent, shows just 5,300 units used per pumpset. The panel concludes that states hide inexplicable power losses in farmers’ accounts. There is, thus, no reliable estimate of power used by farmers.
However, it cannot be argued that agriculture should get ‘free’ power. Farming needs to be energy-efficient. If farmers must pay for power, then the government must account for its price in the cost of food. But input costs — labour and energy — are increasing. The minimum support price does not keep up with this cost hike so farmers lose out. Free energy to farmers is not the question. The price of growing food in a globalised and subsidy-distorted market is.
So, why the power crisis? First, supply is constrained. Governments in India built power infrastructure at a feverish pace but without much thought. As a result, India’s electricity comes from coal-based thermal plants. Between April 2011 and June 2012, according to the Central Electricity Authority, hydro was down by almost nine per cent due to poor rainfall and low water flows. Gas-based generation fell by 20 per cent in the same period. Starved of raw material, power plants operated at 47 per cent efficiency.
Currently, states have the perverse incentive to call for bids on projects — regardless of whether these will generate energy or not. There is no assessment of availability of the water needed for energy generation, let alone crucial functions like ecological flows.
Natural gas-based power with advantages over coal is also badly stuck. Reliance Industry, another monopoly, is sitting on reserves and not drilling fast or enough. It wants revision of tariffs and will not play ball till that happens.
Supply is one constraint. The more serious issue is India’s inability to pay for power. This is not only because power utilities are inefficient and cannot recover bills or keep track of their energy supply. It is also because energy cost is high in India and will get even more expensive and thus inaccessible for the poor.
Published in The Express Tribune, September 4th, 2012.
Data analysed by the Centre for Science and Environment clearly shows environmental clearance is not an obstacle to power infrastructure. In fact, the pace and scale of clearances given to power plants in India pose danger to the environment. It is also incorrect that green clearances are holding up India’s coal production. Clearances have been readily given. The problem is that Coal India Limited is a monopoly player and sits on 0.2 million hectares (ha) of mine lease area, including 55,000 ha of forestland. Its reserves are some 64 billion tonnes but produces only 500 million tonnes per annum.
Secondly, the matter of ‘free’ power to farmers needs more enquiry. The recent report of the high level panel on Financial Position of Distribution Utilities finds huge anomalies in data used to estimate 20 per cent usage by the agriculture sector. Jammu and Kashmir, where transmission and distribution losses (T&D) are as high as 70 per cent, estimates that farmers use 28,000 units per pumpset; in Rajasthan, too, where losses are high, farmers consume 11,000 units per pumpset. But Tamil Nadu, with lower T&D losses of 15 per cent, shows just 5,300 units used per pumpset. The panel concludes that states hide inexplicable power losses in farmers’ accounts. There is, thus, no reliable estimate of power used by farmers.
However, it cannot be argued that agriculture should get ‘free’ power. Farming needs to be energy-efficient. If farmers must pay for power, then the government must account for its price in the cost of food. But input costs — labour and energy — are increasing. The minimum support price does not keep up with this cost hike so farmers lose out. Free energy to farmers is not the question. The price of growing food in a globalised and subsidy-distorted market is.
So, why the power crisis? First, supply is constrained. Governments in India built power infrastructure at a feverish pace but without much thought. As a result, India’s electricity comes from coal-based thermal plants. Between April 2011 and June 2012, according to the Central Electricity Authority, hydro was down by almost nine per cent due to poor rainfall and low water flows. Gas-based generation fell by 20 per cent in the same period. Starved of raw material, power plants operated at 47 per cent efficiency.
Currently, states have the perverse incentive to call for bids on projects — regardless of whether these will generate energy or not. There is no assessment of availability of the water needed for energy generation, let alone crucial functions like ecological flows.
Natural gas-based power with advantages over coal is also badly stuck. Reliance Industry, another monopoly, is sitting on reserves and not drilling fast or enough. It wants revision of tariffs and will not play ball till that happens.
Supply is one constraint. The more serious issue is India’s inability to pay for power. This is not only because power utilities are inefficient and cannot recover bills or keep track of their energy supply. It is also because energy cost is high in India and will get even more expensive and thus inaccessible for the poor.
Published in The Express Tribune, September 4th, 2012.