The Hindu Business Line : ‘I have a three-point agenda for power’

We must meet our capacity addition target for 2008-09. We set ourselves a stiff target of 11,000 MW and my immediate task is to ensure that this target is met.

JAIRAM RAMESH, MINISTER OF STATE FOR POWER

G. Srinivasan

India’s quest for tapping power from both thermal and hydel sources has remained an elusive saga of flawed attempts ever since the Narashima Rao government, in the early 1990s, opened up the sector to private participation, putting a few power projects under ‘fast track,’ with offer of counter-guarantee to prospective power sector players.

Since then, the situation on the ground does not appear to be of any comfort with the country lagging behind in capacity addition.

Though the Planning Commission has been proactive with the current Deputy Chairman, Mr Montek Singh Ahluwalia, evincing keen interest even when he was a Member in the Plan panel in the last few years of the 1990s under the NDA government, the problems plaguing the power sector appear to defy solution.

It is not that there is any dearth of expert views. The integrated energy policy report by the Plan panel Member Dr Kirit Parikh came out with a raft of recommendations.

Capacity additions

No wonder that the latest report of the House Panel bemoans that capacity addition targets in the previous Plan periods have failed miserably, as the targets accomplished in the Eighth Plan, Ninth Plan and Tenth Plans were only 54 per cent, 47 per cent and 51.6 per cent, respectively.

Worse, against the total target of capacity addition of 12,039.20 MW in 2007-08, actual capacity addition was 8,679 MW as on March 26, 2008. With load-shedding and darkness at noon becoming a biting reality in summer, any long-term solutions to make the system work smoothly appear a daunting challenge.

Against this gloomy scenario on the power front, Business Line spoke to the newly inducted Minister of State for Power, Mr Jairam Ramesh, who assumed this additional responsibility on April 7 in Shram Sakti Bhawan.

The articulate Mr Ramesh quipped: “I don’t know how long I am going to be here as this is an additional temporary charge for me. But as long as I am here, I am trying to focus on priority areas for myself”.

On free power, he concedes that “as long as the State has the fiscal capacity to pay for it and as long it makes it transparent and gives through the budget, one has to understand this because we are living in a political economy and not in isolation”. Excerpts from the interview:

“We must go beyond magic mantras. We had Enron mantra and then we got into distribution/privatisation mantra. Now we are talking of quick capacity addition through Chinese machines mantra. But these are not going to solve the problem — it requires hard work, a comprehensive effort and we should definitely avoid ‘quick-fix’ solutions.

Meeting targets

I return to the Power Ministry after almost 25 years. I started my career — intellectual journey — at the Advisory Board on Energy (ABE) in 1983-85. Now I have come here with a three-point agenda. First, we must meet our capacity addition target for 2008-09. We set ourselves a stiff target of 11,000 MW and my immediate task is to ensure that this target is fulfilled.

Second, I intend to focus on the aam admi face of the Ministry by expediting the pace of implementation of Rajeev Gandhi Grameen Vidyutikaran Yojana (RGGVY), involving electrification of 1.15 lakh villages and providing electricity connection to about 2.34 crore below poverty line (BPL) families over the next five years.

Third, I intend to strengthen the public sector in power industry — whether it is BHEL, NTPC, Powergrid or NHPC. The public sector will continue to play a pivotal role in power generation.

In the Eleventh Plan, the Central sector accounts for 52 per cent of capacity addition and the State’s sector another 34 per cent, with public sector contributing to about 86 per cent capacity addition.

This figure is not going to be substantially different for the Twelfth Plan and so we need a public sector. The only lesson of the 1990s is that we need a technologically buoyant public sector. Aside from these three, there are many other things we need to do. We need to look at the whole issue of investment, coal utilisation and all that will come when I look at issues relating to BHEL and NTPC.

Flawed reforms

The entire power sector reforms have been flawed since 1991. The only Plan period where we had substantially achieved target capacity addition was in the Seventh Plan in 1985-90.

As against 23,000 MW capacity addition target, we achieved 22,500 MW. Throughout the 1990s, I have been saying the Enron approach to reforms killed us.

Then we strangulated BHEL — we allowed voluntary retirement in BHEL when 40,000 people left in the 1990s, the whole technological strength of BHEL was emasculated. NTPC was not allowed to expand. So we strangulated our public sector trying to chase the mirage of private sector.

We have paid a heavy price. Having said this, let me hasten to add that we have done well and created pockets of competence. But we need to look at the technological and managerial challenges. Clean coal utilisation is a big challenge in thermal power.

The Three Gorges Hydel project in China with 14,000 MW capacity was put up in a span of 18 years and we have hydel projects going on for 20 years here. Project management is the single biggest weakness in the power sector today.

Private investment

Private investment has a niche role to play. We have a host of private players. Let us face the fact that only private players are coming because of trading. They are not coming here as long-term players. I would like to encourage long- term players in the power sector.

Today, roughly 2.5 per cent of energy that we generate is traded. Trading plays a key role and provides the incentives but we have seen in California (US) that when you have an energy market without underlying physical assets, you have a recipe for disaster.

Hard-core engineering and hard-core management remain the crux of the power sector.

In the capital, we are trying to tie up long-term sources. Today, the installed capacity for Delhi is 3,400 MW and this is going to be 9,500 MW by 2012, a substantial portion of this is going to come from DVC.

There are projects being established by the Delhi government in joint venture with NTPC in Haryana.

We are creating capacity for Delhi. Always there are short-term problems because of surge in peak demand. Power trading will help.

I don’t agree with the view that privatisation of distribution in Delhi has been a failure. In fact, in January 1999, I had a role in drafting the strategy for the privatisation of power.

While there is still load-shed and problems with availability, the aggregate technical and commercial losses have come down substantially and transformer replacement has taken place with digital power meter.

Today, the Delhi system is technically and managerially the better system. Had it been Delhi Vidyoot Board (DVB) the impact would have been worse”.