Politics the Villain in India’s Power Sector

In an interview to this newspaper, coal and power minister Piyush Goyal claimed that the government will supply electricity 24×7 to all Indians within five years. India has enough fuel, technical ability and capacity to generate electricity, but the minister’s noble goal remains out of reach. The real cause of failure to deliver power lies in politics, at the level of state, district and municipality .Goyal believes pumping more money into power transmission -the heavy-load lines that carry electricity around India -will solve half the problem; the other half will be solved by auctioning coal blocks for captive power and metal producers. Strengthening the capacity of Power Grid Corporation (PGCIL) is welcome, although India already has systems to trade electricity between surplus and deficit areas according to time of day .The main problem for generators -the largest is stateowned NTPC -and PGCIL is to get paid for the power they produce and transmit. The largest buyers are state electricity boards (SEBs), each bank rupted by successive state govern ments. These promise free or nearly free power to favoured constituents.

Politicians believe it is their right to patronise theft of power. That has led to a belief among voters in most states that electricity is costless, like air.States like Uttar Pradesh, Punjab and Bihar are known offenders, but even a prosperous state like Tamil Nadu has bankrupted its SEB, during DMK and AIADMK rule.This has developed a culture where freebies are seen as an entitlement. If generating and transmission utilities do not get paid, they will cut off supplies, despite Goyal’s best intentions.

The government is proud of its coal auctions, but these have left bidders from the power sector stranded by not letting them pass on mined coal costs to the consumer. In any case, it makes no sense to sell mines to `captive’ power or metal producers -not the most efficient miners.Open up the sector to professional mining companies, dismantle Coal India’s monopoly and create a real market for coal that is efficiently extracted.

Source: Economic Times; 19 May 2015
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