An area of darkness

With an enviable abundance of resources, how did we end up in the monumental mess of electricity shortage leading to frequent power cuts?

Two events took place a long distance away from each other last week at about the same time. Nothing could have been more ironic than this coincidence. At Los Cabos in Brazil Prime Minister Manmohan Singh assured the G-20, a forum at which he is listened to with respect, that his government was “determined to take tough decisions” to reverse the economic slowdown and the decline of the rupee, and to “revive investor sentiment”.

In New Delhi simultaneously, shocking information tumbled into public domain that ought to make this country and its rulers hang their heads in shame.
It transpired that the supply of coal for the production of electric power, utterly unsatisfactory even at the best of times, has plummeted to such an extent that power companies have had to delay or even shelve projects that would have added 32,000 MW to the existing generation capacity. Two stark facts underscore the enormity of this avoidable disaster. First, nearly 70 per cent of the thermal power produced in India is, and will continue to be, coal-based. Secondly, the additional capacity that has been stymied is a little over half of the revised target for the entire five-year period of the 11th Plan, which is 62,000 MW, as against the original 78,000 MW.
To expect the yawning gap between the supply and demand to be bridged by the “tough decisions” in the offing would be a classic case of triumph of hope over experience. For the excruciating reality is that from 43 million metric tons in 2007 the shortage has risen to 83 million today and is expected to exceed 100 million tons in two years. And this in a country that has one of the largest reserves of coal, estimated at a whopping 267 billion metric tons.
With such enviable abundance of resources how have we ended up in the monumental mess wherein there is a perpetual shortage of electricity leading to frequent, often prolonged, power cuts with no one bothering about the millions who suffer? The answer to this question is long, complex and extremely painful. Some critics maintain, not entirely without justification, that the monopoly of the state-owned Coal India Limited (CIL) over coal production, dating back to 1973, is the root of the problem. There isn’t enough space to examine the intricacies of this issue. Suffice it to say that the rigours of the system were eased over the years. Industries like steel, cement or power etc. could have captive coal mines. More importantly, coal blocks have now been assigned to various power companies that are setting up power plants. CIL also enters into fuel supply agreements with customers. How this system has worked is best advertised by the government’s latest edict. It has enjoined on the CIL to honour at least 65 per cent of the supply agreement or else it would have to pay penalty!
Until the start of 1990s the difficulty was the almost complete lack of coordination between the ministries of power and coal. Since then, with climate change on the global agenda, the ministry of environment and forests has acquired a legitimate stake in both coal mining and power generation. This has accentuated the coordination problem manifold.
Most countries have overcome obstructions by having an energy czar who takes a holistic view. It is not that no one here thought of this. To his credit, Rajiv Gandhi formed a ministry of energy, with coal, power and petroleum under its charge. But the experiment lasted only a year because there was much resentment within the Cabinet against the huge power wielded by the energy minister.
When the era of reform, liberalisation and globalisation began at the time of P.V. Narasimha Rao, with Dr Singh as his finance minister, the government offered generous terms for foreign investment in India’s power industry. Then the Enron scandal burst with the force of a bombshell and blasted the entire scheme.
This is not the end to the deeply depressing story. The tragedy is that even simple steps that can mitigate, though not eliminate, the horrors are not being taken. For instance, since CIL cannot or will not produce enough coal, the deprived power plants are blandly told to import coal. All imported coal is costlier than the coal mined by CIL. The imports become even costlier when buyers go to the world market individually or in small groups. The sensible idea that the country should import coal in bulk and then distribute it among the needy has been on the table for long. It is kicked around but nobody seems prepared to take a decision.
There are many more wheels within wheels. Using costlier imported coal some power stations produce extra power at times of acute scarcity. But the bankrupt state electricity boards refuse to buy it because of the price demanded. The state electricity boards have piled up a collective loss of `70,000 crore because of the free supply of power to farmers across the county, and scandalously high “transmission losses” at least half of which are due to brazen theft, often protected by powerful elements in the establishment.
This lament can go on endlessly. But I must stop and draw attention of at least those who are concerned to the end result of indecision, lack of coordination, inability to implement a decision, if and when taken, and downright incompetence. In 1950, coal production in this country and in China was exactly equal. Today, China produces 3,162 million metric tons. The production here (including that of CIL as well as of all captive mines) is 538 metric tons. The figures of per capita consumption of electricity are even more revealing.
At 597 kilowatt hour here today it is less than 700 kwh five years ago. Over the same period China has increased it from 1,200 to 2,648
kwh, which is almost equal to the world average of 2,730. (source: International Energy Agency).

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