The Hindu Business Line : Powerless

Brace yourselves for a torrid summer. No, not because the Meteorological Department has forecast an exceptionally hot season. But because a large number of States will resort to load-shedding — switching off electricity supply — to overcome the serious shortage of power they face. With an installed capacity of 1,28,000 MW, the country faces a 15 per cent shortage in peak demand and a 10 per cent deficit in energy demand. All regions are power deficit though individual States in some regions may be in surplus. Yet again the addition to generating capacity has fallen short of the target for the Tenth Plan that too after the target itself was scaled down mid-way through the Plan period. If there is one common thread running through the country's power sector, it is that capacity addition during successive Five Year Plans have been way below the target — in the Eighth Plan, the addition was just 54 per cent of the target while in the Ninth Plan, it was even lower at 47 per cent. For the Tenth Plan, the target was scaled down from 41,110 MW to 30,641 MW, of which 17,995 MW had been added till December 2006. Capacities totalling 5,727 MW were to have gone on stream by March end but have been delayed and are likely to begin feeding the grid only in this financial year.

The reasons for the tardy performance in capacity addition appear mostly administrative in nature — inadequate preparedness, delays in obtaining clearances and in award of works. The slip-up is a poor reflection on all concerned since senior Power Ministry officials have been closely monitoring the performance and held periodic meetings, including with the States. They cannot plead being caught by surprise. In such a situation, it is indeed highly improbable that the Ministry's ambitious target of 2,07,000 MW of installed capacity by 2012 — this means almost 79,000 MW of capacity will have to be added in the next five years — will be achieved.

Policy issues and administrative bottlenecks continue to dog the power sector's performance. It does not have a good report card to show since the process of liberalisation began in the early 1990s. The focus initially was on generation, when transmission and distribution were in a mess; then it shifted briefly to the transmission and distribution sectors. Unfortunately, there has not been enough concerted action to ensure that investment flows sufficiently into all three — generation, transmission and distribution. More important, there has to be greater and real consensus on ensuring the financial health of the utilities. Till then, all investment will be, as what a leading player in the infrastructure sector described, more water into a leaking bucket.