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The imperatives in power

For two consecutive days, Prime Minister Manmohan Singh has expressed concern and even frustration at the continuing crisis in the power sector. Aside from calling for a national consensus on forging ahead with major reforms in the energy sector, Mr. Manmohan Singh hit the nail on the head with his observation: "High transmission and distribution losses and theft of electricity are something unacceptable." He cited the case of Maharasthra, which is suffering from repeated power outages. Most of the southern States, which are developed and preferred investment destinations such as Tamil Nadu, Andhra Pradesh and Karnataka, have to contend against an acute power shortage during summer. But the irony of the whole situation is that these States are helpless in the face of the threat of a shortage of 400 MW to 600 MW during the next three or four months. That is because they have not been able to find potential suppliers even at as high a price as Rs.6 and more a unit. Demand has been far outstripping supply, even as power generation targets have remained unmet both in the Ninth and Tenth Five Year Plans. With hardly 50 per cent of the projected capacity addition achieved, the gap has in fact widened over the last decade. As a result, most of the States have gone in for load shedding, either announced or unannounced, which tends to affect the rural populace more than their vocal urban counterparts.

Union Power Minister Sushil Kumar Shinde may be hopeful that at least in the Eleventh Plan the target of 76,000 MW could be achieved. Unfortunately, private sector participation in power generation has not materialised to the extent envisaged — providing just over 10 per cent of installed capacity — basically because of the bitter Enron experience and the non-viability of power projects in the context of the subsidised power tariff prescribed by most State governments. If the Centre and the Union Power Ministry are convinced that the ultra-mega power projects, through a competitive tariff-based bidding is the answer to this crisis, they must push ahead with such projects proposed in the Eleventh Plan. The States and their power utilities must realise that power generation should be their first priority, alongside a determined effort to curb or contain the transmission and distribution losses — which are estimated at over 40 per cent in some States. All power consumed must be billed and the subsidies borne fully by the State governments. Further, privatisation and competition in the transmission and distribution segments can ensure a significant reduction in power losses and theft.

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