Living in a powerless India

Energy shortages in India have increased from about 7 per cent in 2003-04 to nearly 12 per cent in 2008-09, after nearly Rs 200,000 crore have been allotted to the power sector in annual plans covered in this period. This situation prevails despite the major reform programmes that were announced in the early 1990s, the Electricity Regulatory Commission Act 1998 and the Electricity Act in 2003. In the time period between 1998-2003, on an average, the utility sector added approximately 4,000 mw of electricity capacity per annum, and in the period between 2003 to 2009, it added between 6,000-7,000 mw a year. As such, the situation in the more recent past seems to have improved substantially from what we experienced in the earlier period. However, if you compare this performance with the required capacity addition of 18-20,000 mw per year, it comes as no surprise that energy shortages in the country are increasing. It is obvious from these statements that the government needs to do something drastically different to be able to cope with this serious infrastructural problem that is threatening the growth pros-pects in the country. Undoubtedly, it is the government’s responsibility to ensure adequate supply not only for urban, but also for rural India, which largely, even today, does not enjoy the benefits of electricity on tap. At the same time, more attention needs to be paid to something as mundane as being able to forecast our electricity supply and demands more robustly. While India is struggling to estimate with confidence its likely capacity additions over a five-year plan period, the developed world is grappling with being able to make hourly and daily forecast of wind profiles for facilitating a greater share of clean energy forms. Given the challenge of securing electricity supplies to such large numbers of current and potential consumers, the financial and in-kind resources available to the government need to be used judiciously for the purpose of ensuring good quality and adequate flows of electricity services to all. With the objective of providing electricity-for-all by 2009, the Rajiv Gandhi Grameen Vidyutikarn Yojana (RGVVY) was launched in 2005. At a project cost of nearly Rs 30,000 crore, the government claims to have electrified over 50 per cent of the unelectrified (or de-electrified) villages. Unfortunately, RGVVY seems to be focusing almost exclusively on the extension of supply infrastructure into rural areas with little or no regard to the ability of the system to ensure flow of electricity through the wires. In the 2009-10 budget, the government had announced a major increase in the funding for RGGVY and the APDRP (Accelerated Power Development and Reform Programme). The allocation for APDRP saw a steep 160 per cent increase over 2008-09. While this is a positive development, it is also essential that these financial resources are used most efficiently. APDRP, launched in 2002-03, has so far released nearly Rs 10000 crore to the states. The aggregated technical and commercial losses, however, still hover in the range of 33-35 per cent. The Economic Survey reports that these statistics are aggregate numbers and do not quantify the improvement in the towns where APDRP has actually been implemented. However, the fact that these huge resources have not even made a dent in the scale of losses speaks volumes for the cost-effectiveness of this programme, as it has been implemented thus far. The monitoring mechanism that the prime minister has announced for ensuring effective outcomes from investments needs to evaluate these two programmes urgently and redirect them toward the direction appropriate for ensuring effective outcomes. The new initiatives on bringing about substantial efficiency improvements, whi-ch will be strengthened as part of the mission on energy efficiency under the national action plan on climate change, may bring some relief to the growing shortages but one again needs an aggressive push combined with the right market/financial incentives. In the case of the vexed problem of petroleum subsidies, the government benefited from the temporary relief provided by international oil prices. In the case of electricity shortages, there is no choice but to bite the bullet of reforms hard — not just in terms of setting up regulatory institutions but actually defining a vision for the power sector and delivering on performance.