The Hindu Business Line : Kerala: New policy framework for power sector mooted

A CASE has been made for an alternative policy framework for the power sector in order to meet the objective of electricity for all and to cure the present identified ills of the sector.

The new policy should focus on the three important aspects of availability, accessibility and affordability, according to a paper prepared by KSEB Officers Association.

It says that the results of the present policy, which envisages the unbundling of the State Electricity Boards into separate entities for generation, transmission and distribution, have not been encouraging. Apart from the oft-quoted experiences of California, Montana, Egypt, Orissa and Enron, the latest instances of blackouts in the US, Canada, the UK and Italy, have exposed the flaws of such a policy.

As for the availability factor, the paper notes that the Union Government's target of adding 1,00,000 MW by 2012 is unrealistic. During the Eighth and Ninth Plan periods, the achievements were as low as 53.88 per cent and 47.22 per cent, respectively.

Significantly, only State and Central public sector utilities had been able to meet the targets during the plan periods, while the private sector had miserably failed to do so.

The Planning Commission, in its approach to the midterm appraisal, has taken note of the situation and has termed the disappointing performance of the power sector as the single largest cause of concern to the economy.

In the case of Kerala, the demand for power is projected at 3,369 MW and 4,837 MW by 2007 and 2012, respectively. On the other hand, the new capacity additions envisaged are 210.5 MW by 2007 and 192.25 MW by 2012. This will leave an availability gap of 450 MW and 1,800 MW at the end the two Plan periods.

In the circumstances, the paper feels that the State needs projects and finances to address the issue of power availability. Also, the selection of new projects should look into various sources options such as fossil fuel, renewable sources, including water, and nuclear fuel. A policy promoting use of indigenous fuels is an immediate necessity.

Accessibility is another vital element of any alternative policy. It is pointed out that there are around five lakh registered consumers waiting for connections in the State. Further, there are remote locations of human settlements, including tribal areas, for which access to electricity is still a distant dream.

This calls for expansion of networks to the remotest corners of the State and for this, finances and the will of the Government of the day are required. This is especially so because it is mostly not a commercial proposition.

Affordability is the third component that should be kept in focus while framing the policy. It is pointed out that factors such as the present parameters of fixing power tariff guaranteeing a return on equity of 14 per cent or 16 per cent, unrealistically high depreciation rates averaging 8.04 per cent and high interest rates have increased the cost of power generation and transmission.

Interestingly, while the average generation cost of the State Electricity Boards increased from 65 paise to Rs. 1.30 over the last ten years, the average generation cost of the National Thermal Power Corporation (NTPC) and independent power producers went up from 75 paise to Rs 2.40 during the period, says the paper.