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Agony of Power (Electricity) Sector

 

Mindset of the ‘Representatives of the people’ (i.e. Ministers, MPs and MLAs) is just like the owner of a godown in a folk story, that goes like this –” The manager of the godown informed his master, “Sir, goddam me aag lag gayi.” (Everything is burning in the godown because of the fire) The master replied, “To mainu ki” (Why should I bother). The manager said, “Sir aapke hii ke godaam me aag lagi hai” (It is your own godwn, which is burning). The master got irritated and said curtly, “To tainu ki?” (Then why do you bother)?  

Recent Grid failure and its reaction in political circle

Of the 370 million people affected in India due to massive failures of power grids and consequently blackouts on 30th and 31st July, 2012 for more than 10 hours. There was a news item in the front page of times of India on 31st of July, “Manic Monday: Northern grid collapse paralyses city.” Northern grid is the largest arteral network for power in the country. Eight northern states – Most of Delhi, UP, Punjab, Haryana, Uttarakhand, Rajasthan, Himanchal, Chandigarh and J&K- faced the worst power crisis in a decade.

The very next day, word’s biggest-ever blackout happened when North, East and North-East Grids tripped. About 684 M Indians in 2o states and 2 Union territories reeled under world’s biggest-ever blackout. The tripping in Northern gridaffected Delhi, Uttar Pradesh, J&K, Punjab, Haryana, Himanchal Pradesh, Uttarakhand, Rajasthan, Chandigarh; Eastern grid Bengal, Bihar, Odisha, Jharkhand, Sikkim and North Eastern Grid Assam, Arunanchal Pradesh, Nagaland, Manipur, Meghalaya, Tripura. This grid collapse had impacted over half the India’s population. It also affected communication, essential services, industry, economy and the life of peope in large way.

The recent grid collapse affected power supply crippling the normal life in the entire region. Transport, rail and air services were hit. About 300 trains came to a halt or were cancelled. In Delhi, Metro network was grounded for over an hour. Airports and hospitals had to switch on back-up generators to maintain services. Water supply was hit. Lack of power holds back India’s industrial growth as well. Power shortage seriously affects the country’s manufacturing sector and hurts exports. The recent blackout disrupted the working of industrial and production sectors. Some 300 miners were trapped in coal mines.

The recent grid collapse was due to mismanagement. It is an administrative failure.

Importance of electricity in modern India – Electricity is the life-line of modern life. Everything standstill, once it is out of gear. In India, power sector has just not been able to keep pace with fast growing economy. The energy requirement of an economy of present time, when it is moving from low growth position to a relatively high growth, has increased more rapidly than in the past.

The government has also failed to provide even basic facilities to the people, electricity being the most essential requirement. Most of the people living in small towns or rural areas hardly get electricity for 2-3 hours continuously. It is not a temporary problem for a day or two days.

Political Apathy – (Times view p1, TOI, 1.8 2012) Attitude of Ministers, MPs and MLAs towards the issues of power sector is very casual. They are mainly responsible for the precarious state of country’s power sector.

Power minister, Mr Shinde was given the charge of a more important ministry of Home in the “wake of the most colossal failure of the power grid the country has ever experienced.  “Moving Sushilkumar Shinde out of power ministry now is like changing the captain of The Titanic when it is reeling after hitting a giant iceberg. The country is as in midst of unprecedented power crisis. For two days in row, the grid has collapsed. … Yet Shinde is promoted as home minister. … Shinde is likely to have some clue about power problem; a new minister – who will be holding additional charge of the portfolio – will possibly have none.”

The government took several years in attempts to realize the objective enshrined in the Preamble of the constitution to establish “a socialist, secular, democratic republic” in which there is equality of opportunities, fraternity etc. So far, they have not been successful to provide even basic services to the people, forget about eradicating poverty, ignorance and inequality in opportunity.

People behavior equally responsible – People of India are equally responsible for all the mess. Centuries of alien rule has made them so helpless, that they forget to raise their voice against the misdeeds and corrupt practices of public servants. They are tolerating all the sufferings silently.

A vast majority is living in areas outside the cities and major towns hardly get electricity for a very few hours everyday. The people’s patience in tolerating inadequate essential services in terms of power, water, road, healthcare and sanitation has embolden the representatives of the people and others in helm of authority. The voice that “Millions of households were plunged into darkness due to its failure”, was raised mainly by the media and educated city dwellers. It is true that they are accustomed to the luxuries of electrical power, but in the absence of power, they have alternative arrangements. Their generators and inverters can be on.

No need to blame others – For the grid failure, the minister for power, Mr Shinde tried to put the blame on power overdrawals by some ‘errant’ states. The grid collapsed in the midnight at 2.30, when the load remains the minimum. Then, why would states overdraw the electricity? It means fault lies somewhere else. It is the problem of mismanagement and negligence of officials on duty. The working of load dispatch systems needs to be improved.

As former Union power secretary, Mr EAS Sarma points out, “Instead of addressing the real problems – technical, commercial and institutional – the centre and the states are trying to divert public attention with a mutual blame game that leads us nowhere.”

No dearth of talents – There is no dearth of talents and technical knowhow in the power sector, still power sector has not been able to keep pace with the time. Power is seen as the biggest infrastructural constraint on India’s growth. It suffers from huge losses, large shortages and is starved of investments. Why? The need of the time at present is to appoint right man on right post without any bias. Instead of passing on the blame on others, there is a need to fix up the responsibility and penalize the persons for negligent working.

Systems and technical know-how is available – Systems are there to check overdraws. As Mr Sarma tells “There are eight state grids interconnected through high voltage alternate-current (HVAC) links in the northern region. There are few crucial high voltage direct-current (HVDC) links also that transfer bulk power among the states according to an established formula. There are several high voltage transformers that step up and step down voltages into the system. There are both state and regional dispatch centres with state-of-the-art technology that keep minute to minute tab on the power system health, triggering preventive and corrective action when needed”

The problems of power sector

The recent simultaneous grid failures had happened because of –

  • Cash-starved power sector,
  • Loss making state owned utilities,
  • Preference to overdraw power rather than contracting adequate power, thereby putting grids at risks.

Demand-supply mismatch – The power generation in the country has not been able to keep pace with growing demand. Between 1980-81 and 1990-91, the nation’s power generating capacity grew by 124%. In the next decade of economic reforms, the rise in capacity was as low as 58% and the decade after that upto 2010-11 also saw an increase of 75%. A major reason lies in the sorry finances of the state electricity boards. (TOI, 1.8.2012)

Power losses – About 27% of the electricity generated goes waste every day inTransmission and distribution. Attention needs to be paid towards the aggregate technical and commercial (AT&C) losses. All-India average AT&C losses were pegged at 27.15 in 2009, in which southern region had an average of 19.49% and the north-eastern region 36.44%. Some states had loss levels as high as 70%. (27% power goes waste, Dhananjay Mahapatra, p. 12, TOI)

Power ministry documents noted that “Some of the defaulting states are also defaulting in payment of the unscheduled interchange charges, which was to the tune of Rs 1,500 crore at the end of May with the biggest defaulters being UP (Rs 842 crore) J&K (Rs 498 crore), Punjab (Rs 81 crore and Haryana (Rs 58 crore).” (Quoted from 27% power goes waste, Dhananjay Mahapatra, p. 12, TOI)

Irregular Coal-supply – There is a need to improve regular coal supply by dismantling Coal India monopoly on coal, clamp down on politically endorsed theft of power, which push up technical and commercial losses by more than a quarter and build a smart grid that can improve the overall efficiency and reliability of power sector.

Stalled power projects – There is a rising demand driven by increasingly urban lifestyles and a growing dependence on electric pumps in agriculture. But because of differences among power, oil, coal and environment ministries, many power projects are dying a slow death. The government does not have the requisite will to resolve the problem. Following are the stalled projects –

Power Project Capacity in MW Reason for delay
NTPC, Bijapur, Karnataka 4,000 Environment clearance
NPCIL Kudankulam, TN 2,000 Safety concerns/protests
Coastal Energen Tuticorin TN 1,200 Power purchase agreement with TNEB
ESSAR 1,200 Environment clearance
NHPC, Dibang Valley 3,000 Environment clearance
NHPC Middle Subansiri Hydel 1,600 Environment clearance 
Jatpee’s Lower Siang 2,700 Environment clearance
Reliance power, Chitrangi, MP 3,960 Environment Clearance 
NPCIL’s Mithvirdi, Gujrat 6,000 Environment clearance
Saurashtra Coal Based, Gujrat 4,000 Forest clearance
Cheemeni Gas-based, Kerala 1,200 Environment clearance
     
     Source: CII, Companies    

 

If there will be adequate generation of power there will be no need to overdraw.

Delaying Reforms – Without necessary reforms the power sector has not been able to cope with present situation. Mismanagement in power sector adds up to Rs one lakh crore losses for electricity boards. (TOI, Aug. 1. 2012, p.12). Several reforms have been suggested, which requires a strong political will to bring them in.

Need to strengthen State Electricity Boards – There is need to recapitalize the State Electricity Boards. Government interference is delaying reforms to restore the deteriorated condition of State Electricity Boards.  State Electricity Boards suffering from huge losses and starved of funds. One of the reason for it that right persons are not posted at right place. Then there is rampant corruption and undue political interference. With the result that electricity boards are “are unable to meet the requirements through short, medium or long term contracts or from power trading. They generally prefer to overdraw from the common grid undeterred by the penalties imposed on such practices.

Financial woes – With a combined debt of around Rs 2 lakh crore, the SEBs find it difficult to keep them running or manage money to invest in increasing its capacity. Their financial distress is largely a result of politically mandated populist policies of government.

Financial woes mean ‘work on hold’. The Shunghlu (former comptroller and auditor general) Panel looked at the finances of the power utilities in March 2010. High losses are due to pilferage, inability of firms to pass on the burden of higher coal and gas prices and failure of the government to clear the subsidy. The financial distress is so acute that even public sector banks are refusing to lend to power distribution companies. “Primarily, operational and management issues coupled with regulatory shortcomings are responsible for the losses.”

Subsidies – Subsidies aimed at buying vote-banks are bleeding state utilities. Government insists on free power to farm sector and other such populist measures clearly put pressure on the system. Providing free power to agriculture has created many problems and puts mounting losses on state utilities. Mr Pronob Sen, principal advisor at planning commission says that free power is not that much an issue as is that connections are not metered and there is enormous theft. Discoms are also discouraged from seeking tariff revision. The result is that electricity tariffs are not very low for agriculture, but also lower than they should be for many other categories of consumers.

Electricity pricing – Electricity to the consumer is under-priced. The planning Commission has said in a report, “Electricity prices are set up by state regulators, but most regulators have shown a tendency to hold back tariff adjustments, typically under political pressure.” (Quoted from Government’s iron grip on SEB’s delaying sector reforms, TOI, 1.8.12, P. 12)

Theft – More than 30% of power produced in the country is lost to theft and inefficiencies of state distribution networks. Lack of political will prevents speedy implementation of steps needed to stop it. In an era of coalition politics and fragmented policy, parties escape from taking strong actions for the fear of losing their perceived vote-banks.

Distribution – Distribution is the weakest link of India’s power sector. Grid indiscipline due to weak distribution system brought the current collapse. States like UP, Haryana and Punjab keep on overdrawing power, whenever they need. Heavy penalties should be imposed on erring states, regional load dispatch centres should be empowered to disconnect them from the grid, if needed to prevent grid failure..   

Regulators –It is usually said that a mess has been created by the states and its regulators, most of them being former IAS officers, selected by these governments. They are unable to enforce and set the ground rules objectively. Out of 15 state electricity regulatory boards, 14 are headed by retired IAS officers, while UP has a former NTPC official as its chairman.

Shungulu Panel Report points out that “Irregular determination of tariff, leaving uncovered revenue gaps, camouflaging the same through measures like creation of regulatory assets and laying down unrealistic efficiency improvement targets instead of revising tariffs, etc, are nothing but examples of regulatory failure to discharge statutory responsibilities.”

In order to perform their role in an independent manner, there is a need of selecting persons as regulators, who have strong will power and good character, so that they can keep themselves away from political and other influences. 

Shanglu Panel has suggested that to ensure the integrity of regulatory regime, “State electricity regulatory commissions should be made independent financially as well as in their functioning. Selection of chairman and members of Electricity Regulatory Commissions needs to be fine-tuned and their functioning should be scrutinized by an expert group.”

Overdrawals – Discipline in respect of drawl of power and maintenance of frequency is necessary for operation of a grid. Over-drawl has become easier with inter-connect. There is a fallacy of separating grid and load dispatch operations.

As Mr Sarma points out, “Responses to crisis situations should be automatic, not manual. They should be based on highly sensitive, quickly responding, automated under-frequency relays that isolate the troubled portions of the grid before the contagion cascades into grid collapse”

Both high and low frequencies beyond certain reasonable limits damage power equipment and cause power plants to trip.” … “The power drawals in each state should match power availability. If demand exceeds the avalibility, frequency drops dangerously, causing tripping of the system. Before that happen, the demand needs to be managed prudently. Also, when power availability exceeds demand, the frequency can shoot up dangerously. Then, it becomes necessary to back down some generation.”

Suggestions – Mr Sarma, former Secretary Power in government of India, suggests-

  • There is need to recapitalize the State Electricity Boards.
  • All agricultural consumers should be billed monthly on the basis of meters installed on new pump sets and an average consumption under different geo-climatic conditions should be calculated. Based on these statistical norms each agriculture consumer should be expected to pay at least 50 paise/unit to discom/SEB directly.  
  • Also required to safeguard grid stability, “electricity tariff linked to the system frequency with inbuilt incentives and penalties for maintaining discipline in load management. The ‘availability’ tariff introduced by Union power ministry years ago was aimed at this.”
  •  Instead of giving more emphasis on adding new generation capacity, efforts should be directed towards improving the operation of existing power plants and strengthening the transmission and distribution (T&D) system and on protective equipment that responds automatically to crisis.

5 ways to fix the mess as suggested by “Times” group

  1. Price power properly so that state utilities have money to buy power.
  2. Check theft and account for every unit of electricity produced. Cut out free power.
  3. Get regulators with teeth. Currently most of them are retired IAS officers, with a little know-how of the technical problems and their solutions.
  4. Invest in building new power plants, give them remunerative tariff, and revamp existing plants.
  5. Plan for the future – for 10-20 years not for 5 years. (TOI, P.1, 1 Aug 2012)
  6. Attention needs to be paid towards the aggregate technical and commercial (AT&C) losses on priority basis.

The present minister of power after assuming charge of the power portfolio immediately after the two days consecutive grid- collapses assures the nation that to improve the power generation capacity several power projects, ready to be commissioned, but their commissioning is being delayed due to environment al objections or other issues. “… Within three months, we will put a road map to achieve drastic reduction in AR&C losses which will have multiple beneficial effects on the power scenario in the country.”  … “The priority is to maintain strict grid discipline and bring down the all India average AT&C losses to 10-12% level.”….”Another priority is to introduce stringent penalties for states and officers concerned for withdrawal of power beyond contracted quantities. If need be, related provisions in Electricity Act, 2003 could be amended.” 

 Note 1 :

A report by the panel of experts headed by Central Electricity Authority Chairman Mr Bakshi says “A combination of weak power transmission system, toothless regional grid operator and excessive consumption by Haryana triggered the world’s biggest blackout that left half of India’s population without power for upto 24 hourson July 31. Haryana was overdrawing 25.5%, U.P. by 20.8% and Punjab by 5.5% when the northern grid collapsed on July 30. Next day Haryana was drawing 22.4% excess power. However UP had reduced its overdrawal to 6.4% and Punjab to 1.2%. (TOI, P 1, 17.8.12)

Note 2:

Following the twin blackouts on July 30 and 31 that became an embarrassment on a global scale, just to soothen the public sentiments, the minister for power had made an statement that “I am contemplating now heavy fine and also a provision to imprison authorities and state chief Secretarities for disobeying that load dispatcher’s order to stop overdrawing…. Perhaps we need to enforce it”. (TOI, p.1, 20.8.12) Why only authorities and state chief Secretarities, why not ministers? It is the populist policies of political party in power to create vote banks that are causing problems and putting extra pressure on administrative machinery. Fixing up responsibility is almost imponsible practically under the present circumstances. The government will keep on looking endlessly at legal provisions to fix the responsibility or jail Ministers or Chief Secretaries of states that overdrew power from the grid, causing it to collapse. 

 

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August 12, 2012 - Posted by | General | , ,

2 Comments »

  1. Thank you for youe well written article.In my views , the agonies of the citizens of India , as these relate to power sector are far deeper, and symbolize the maladies of the governance system .Without a revamp in the overall governance system , it is not possible to bring about any substantial reforms in the power sector .But if the issue is limited to preventing the failure of grid in future , it can be done with strict vigil , discipline and punishment .But that wiuld be only touching the tip of proverbial iceberg.

    Comment by Vidyanand | August 12, 2012 | Reply

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