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 India
is perennially short of electric power. It is indeed
disheartening that in spite of striving to increase
power generation, the gap between the demand and supply
in the power sector is increasing with each passing
day with shortages up to 30 per cent and more in the
most power-deprived states. A study conducted by the
Associated Chambers of Commerce and Industry of India
(Assocham) points out that the major impact of power
shortage last year was felt by industry in Maharashtra
and Gujarat, with a deficit of 11.6 percent and 8.5
percent, respectively. In Uttar Pradesh, power shortage
was 13.3 percent, Karnataka 10 percent, Tamil Nadu 8.1
percent and Andhra Pradesh 7.7 percent.
The southern region also continued to reel under severe
power shortage, with Tamil Nadu facing a deficit of
2,268 million units, Andhra Pradesh 2,380 million units,
Karnataka 1,880 million units and Kerala 636 million
units. According to the study ever-widening gap in the
availability of power is expected to further affect
industrial production this year.
The generating capacity in 1997 was 76,700 MW which,
it was estimated, would have to be doubled in the next
10-15 years, requiring an addition of some 7,000 MW
of new capacity per annum. This calls for an investment
of some US$30 billion over the next 10 years. There
is no way the Indian government can carry out this enormous
and expensive work on its own, which is why foreign
and domestic players are now allowed into the power
industry. However, privatisation calls for dramatic
change in the state of affair of the power sector. With
the aim of attracting private investment the government
has brought about a lot of changes in its policies in
order to make the power sector lucrative for investment.
But unfortunately studies show that most of these changes
are restricted to theory only. In reality, the whole
sector is plagued by a lot of red tapism.
Despite the past six years of economic reform, supplies
and sales of all petroleum products in India, till today,
remain almost wholly controlled by the central government.
 As
a result private sector power developers in India have
had to wait for almost a year for approvals from the
central government for fuel supplies. According to the
Assocham study "the inordinate delay in the commissioning
of power projects on schedule will further depress industrial
production in 2001, with industrially-advanced states
of Maharashtra, Gujarat, Karnataka, Tamil Nadu and Andhra
Pradesh bearing the brunt of the shortage." Given
the gaping disparity between demand and supply, the
Indian power sector is being chased by the world's most
prominent independent power project developers, generation
equipment suppliers and project financiers from all
over the world. The largest participation has come from
the United States. It is therefore very important that
the government really works towards retaining the interest
of the investors by speeding up the process of implementation
and execution.
Some reasons of low supply of power
Coal is the most important fuel for India 's power sector.
It is the source of more than 70 per cent of generating
capacity. But, coal shortages, delays in coal transportation
and the low thermal
quality of coal supplies cause disruptions in power
generation and result in lower plant load factors.
Transmission and distribution losses in India are high,
in the range of 20-23 percent. State Electricity Boards
(SEBs) generate and distribute power, set tariffs and
collect revenues. However, they suffer from chronic
financial problems because of rising generating costs
accompanied by eroding revenues due to pilferage, bad
debts and supply of power at subsidised rates for the
agricultural sector. They continue to operate without
a clear guideline on how to price power. Every year
the government loses billions on power subsidies to
agriculture.
Steps taken to increase the supply
1. In order to bridge the gap between demand
and supply of power, a government policy was initiated
in 1991, with the aim of encouraging private sector
participation. The policy enables the private developers
to set up power projects of any capacity and of any
type. The policy also allows liberal capital structuring
and an attractive return on investment.
2. Since thermal power plants are the major contributors
in the power sector, and coal reserves in India are
concentrated only in certain parts of the country, a
policy has been adopted to facilitate the setting up
of large-sized power plants located at pitheads in the
country. This has been done with the aim of deriving
the benefits of economies of scale.
3. There are plans of improving the supply of
power by exploiting the existing capacities to the maximum,
adding new capacities, reducing the distribution loses,
bringing about structural reforms of the power problems
facing the country.
4. It is also seen that administrative clearance
for implementation of projects is given easily so that
short gestation power projects are completed without
hindrance. This would attract more and more private
investors.
5. Measures are taken to minimize transmission
losses and facilitate inter-regional transfer of power
by establishing the necessary transmission network.
6. Projects are being taken up for exploiting
the country's hydro potential, including small and mini
hydroelectric projects, so that an additional capacity
of 100,000 megawatts can be achieved in the next five
years.
7. There are also plans of making more use of
other renewable resources like wind and solar energy.
Picture Courtesy: Swagat, August 2001
- Shravanti Choudhuri
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