Verdict 2009: Priority Power

Can the new government focus on the two most needed infrastructure priorities- power and road that can put the country on real fast track of development?

Perhaps that was the intention when the Manmohan’s government prepared the 11th Plan (2007-12) that envisages addition of a whopping 78,000MW. It means an addition of around 15,600 MW every year. However, out of the targeted 11,061 MW capacity addition for 2008-09, only 3,453 MW or 31.2 per cent has been achieved. In the previous year 2007-08, it achieved 9,283 against the target of 16,335 MW that is, 56 per cent of the target. How will it improve on the annual addition to make up in the three years left? Can the new government search a real dynamic leader to lead power ministry? Will Shinde or Jairam Ramesh be able to do that? What happens if in 2014, the voters make them lose the mandate for not keeping up the promise?

Power generation in India is 140 gigawatts (GW) today and will go to be close to 800 GW by 2032. Between the NDA and UPA rules, per capita power consumption increased from 592KWH in 2003-04 to 707KWH in 2007-08. However, peak shortage has also gone up to 16%.

Top priority must go for ramping up electricity generation capacity, reducing transmission loss by getting states to re-start reforms, and changing laws for effective private role in nuclear power such as low cap of equity. Administration must take head-on the tendering tangles, delayed statutory clearances, disjointed fuel supply chains and a severe shortage in facilities to manufacture power equipment.

Transmission & Distribution requires attention too. For every euro invested in power generation, investment in T&D is to be also one.

Funding: As reported, the government may face an Rs4.51 trillion funding shortfall in adding generating capacity during the 11th Plan.

Will the economist Prime Minister take care of the funding constraint?

Power equipment manufacturing capacity: India’s capacity of manufacturing power equipment has been a big constraint, though it is set to increase four-fold to around 43,000 Mw over the next five years through investments of over Rs 30,000 crore. India’s overall capacity of power equipment manufacturing stands around 10,000 Mw, solely contributed by the government-owned Bharat Heavy Electricals Ltd (BHEL). However, companies like Larsen & Toubro, JSW and Reliance are in the process of setting up equipment manufacturing capacities in the country in partnership with overseas partners. Will the task be taken up as priority?

Either BHEL upgrades fast or the country goes for extensive import of the equipment. Foreign suppliers will have to enter. Many private companies and state government have already gone for the Chinese power equipment manufacturers like Dongfang Electric Company (DEC) and Shanghai Electric Company and have ordered over 20,000 Mw capacity of power generation equipment for the current Plan period, which ends in 2012. The country must meet the target without any emotional attachment for local supplier till the power situation becomes comfortable.

Fuel Shortage: The new government will have to take care of the scarcity of fuels such as coal, gas and uranium with sufficient buffer stock in store that has been causing underutilization off the installed capacity. The country’s gas-based capacity of 14,600MW operates at 52% efficiency. 17 nuclear reactors are currently operating at 46% capacity because of shortages of the fuel. With enough gas and uranium, around 9,500MW power generation can immediately enter the system. What can be the excuse for the government, if it fails even after the so much talked about Indo-US Nuclear Deal?

Nuclear Power: Manmohan Singh must show the benefits of his coveted indo-US Nuclear Deal. The country must see at least some of the nuclear plants through foreign companies running in his term ending in 2014. It is to be seen if the government moves fast and innovates for speedy implementation or works only on finding excuses for not achieving the goals for the campaign trails of 2014 election?

Efficiency improvement: Can the government find and take some innovative steps to cut down the losses because of inefficient transmission and distributions that is around 40% of the power generated. Will it make APDRP, meant to upgrade the distribution system, minimize transmission and distribution losses, improve metering and assign responsibility for realization of user charges, function effectively? APDRP had set a target to bring down the losses to 15% by the end of 2007, sometime in 2000-01.

Let the Manmohan and Rahul leadership not get complacent with the comfortable win. The electorate don’t keep on making mistakes between the one who just promises and the other who achieves.

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