Sweltering India runs out of
energy By Siddharth
Srivastava
NEW DELHI - Power outages in
India, now enduring the peak demand of hot summer
months, are running to as long as eight to 10
hours in northern cities, including the capital,
and while large parts of the country continue to
be off grid rural areas with access to electricity
can be without power for over 20 hours at a
stretch.
The Uttar Pradesh government this
week ordered that electricity be cut off at malls
and shopping centers in the evenings, before
apparently backtracking in the face of angry
traders who put up defiant protests, clashing with
police.
Billions of dollars have been
invested by power producers to create new capacity
over the past few years, but numerous factors
linked to populist politics, over-zealous
implementation of
environment norms,
transmission losses, pilferage, free power to
agriculture and bureaucratic tardiness have
resulted in under utilization of existing
capacity. In short, India can produce more power
if it wants to, but is unable to.
One
bottleneck is coal, the majority of which is mined
by state-owned Coal India Ltd (CIL). The bulk of
Indian power is produced at coal-fired thermal
plants, but CIL has not been able to increase
output to meet the country's needs.
The
environment ministry has declared many of the
company's mines to be in "no go" zones, while the
bulk of CIL's coal supply comes from areas in
eastern India where Maoist rebels are active. It also has to rely on another government
institution, the slip-shod Indian Railways, to
move the coal. Coupled with in-built delays and
indecision within the government, CIL's output
growth has been near stagnant over the past three
years, with the result that more than one-third of
India's coal-based thermal power plants are
running on critically low levels of fuel stocks
this season.
Estimates suggest that if CIL
continues to falter in supplying coal, India's
target for adding new power capacity for the
2012-17 period will need to be slashed to 45,000
megawatts from the proposed 76,000 MW. New Delhi
has already scaled down its capacity addition
target for the next five years by 25,000 MW to
75,000MW from conventional sources.
The
coal ministry, meanwhile, has projected that
India's annual coal demand could rise over 40% by
March 2017 to nearly 1 billion tonnes while
domestic coal output may increase by less than
30%, leaving a gap of around 300 million tonnes
that will have to be met by imports.
India's power woes do not stop there.
Electricity generators such as NTPC, Tata Power
and Adani have the option of buying coal from the
likes of Indonesia, Africa and Australia, but
overseas prices are too steep compared with the
artificially depressed domestic prices set by the
government. Simple economics would dictate that
higher cost linked to importing coal cost would be
reflected in consumers's electricity bills - but
that is not possible as the power rates are again
kept low by the government which fears a political
and public backlash if it lifts tariffs. So power
producers are not able to generate power - and
even if they could already heavily debt-burdened
distribution companies can no longer buy dear and
sell cheap.
In consequence, companies and
individuals who can afford to rely on diesel for
electricity. Millions of liters of diesel are
guzzled in the summer months to keep the shopping
malls, high-rise condominiums, offices and
commercial establishments running.
As
India does not produce enough of its own oil, the
bulk of the diesel is imported, draining foreign
exchange, creating balance of payments problems
and weakening the rupee - which drives up the cost
of imported products such as oil and coal.
The government continues to subsidize
diesel to protect among others the transport
sector - which adds to the ever-rising fiscal
deficit, which again helps to fuel inflation. It
is no surprise that rating companies such as
Standard & Poor's have cautioned that India's
investment climate could be pegged at "junk''
levels.
Meanwhile, in the sweltering
streets and fields of India, the poor die of
heatstroke, a savage reminder that the structural
infirmities built into power generation ostensibly
to protect the poor are actually harming the
impoverished the most. While India pushes to
increase its use of renewable and nuclear power,
it is the thermal power energy chain that needs
some serious attention and reform.
Siddharth Srivastava is a New
Delhi-based journalist. He can be reached at
sidsri@yahoo.com.
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