Power – Is there a remedy?

It was 80s. Hindustan Motors (HM) was in better shape. It was coming out with new projects at Pithampur (MP) and Halol (Vadodara). It was trying to push up the production at its parent plant at Uttarpara (Kolkata). But power was the main constraint. It had to make a major investment to install standby power generators for about 20MW. Even at that time it was an unnecessary investment to cover up the failure of the government policy that had kept all power plants in public sector.

The condition of power in West Bengal improved thereafter, perhaps as the requirement reduced because of the closures of many factories due to aggressive unionism. But even today after 30 years, the situation of power has not much changed. In Noida or for that matter in every township of the country, the power situation is one of the major irritants holding people to improve the quality of life.

As reported, the peak hour demand for India is 100715 MW. 86818 MW is met by its generation. Gap is thus 13897 MW i.e. 14%. India has succeeded in reducing just one percentage point of the peak shortage since 1991.

Majority of generation projects are with public sectors. It never gets completed in the scheduled time. Last three Five-year plans (VIII, IX, and X) saw only half of the targeted additions to generation capacity attained.China adds generation capacity of 70000 MW every year. India added 21180 MW IN THE LAST FIVE YEARS. Bihar has not even added 1MW in the last 10 years.

Aggregate technical and commercial (AT&C) losses in states such as Bihar, Maharashtra and Madhya Pradesh amounted to over 50% in. In monetary term, AT&C losses cost Rs 47,000 crore a year that could add 47 IITs every year in India. The amount is equivalent to the UPA’s allocation to poverty alleviation last year. 27% of the electricity produced goes to vote banks in the farm sector free and get to a great extent wasted. If the farmers of Punjab and Tamil Nadu can get it free, why should others not? Governments have the diagnosis right for many years but ducks in providing remedies.

But the country is still growing at the rate of 9% plus with manufacturing touching even 15%. Is it not interesting? Here is one data from the cement industry that is highly power-intensive sector. Cement manufacturers had to go for cost reduction to contain the government pressure to hold he price. It went for captive power, as it provides an alternative to reduce this cost component.

As reported, “on an average, states charge Rs 4-5 per unit, where as, captive power costs between Rs 1.50 to Rs 2.50 per unit, thereby bringing a straight benefit of Rs 2.50 to Rs 3 per unit. Depending on the process (dry and wet), production of one tonne of cement requires 110 to 125 units. This means, if power is sourced from a captive plant, manufacturing one tonne of cement will bring the power cost down by half, from Rs 540 per tonne to Rs 270 per tonne.” According to the Cement Manufacturers Association (CMA) “For maintaining profitability, we are taking measures to ensure better cost efficiency. We have now 100 per cent captive power which reduces our costs.”

Is it to be doubted?

Unfortunately, the private sector has not come in big way to solve this major problem that is holding the country’s growth as well as the quality of life of ‘aam aadami’. Private sector’s share in power generation is only 12.9%. I fail to understand why the associations such as CII are not able to convince the bigger players in industry to go for it as priority, as after all it can never be a losing business with billion plus consumers and entrepreneurs bribing and waiting to get power sanction. I do also can’t digest the lack of initiatives from the town government. Why can’t Noida and many such townships that earn thousands of crore auctioning their land in booming real estate market invest on having the power generation of its own?

Many a times, I wonder should I (at 68) not get satisfied with the many heartening announcements such as ‘The Ministry of Renewable Energy plans to achieve 80,000 MW of electricity generation through renewable sources by 2032′, L&T going to manufacture electrical power equipment’, ‘Seven mega power projects to come’ and ‘Electricity for all by 2012‘, appearing day after day in media.

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