Click to play videoIndia may be a democracy but its people are powerless. Summer has just begun and there are power cuts across the country. With mercury rising, protests are taking place against power cuts in Delhi, Haryana and parts of UP.
There are 16-hour power cuts in Kanpur, the West Bengal Raj Bhavan voluntarily cuts electricity for an hour, an electricity substation in Gurgaon is attacked, staff beaten up and equipment smashed.
Face the Nation debates: Will power shortage spark civic unrest?
Shiv Sena Lok Sabha Member of Parliament and ex-Union power minister Suresh Prabhu, author and power expert Navroz Dubash along with People's Action President Sanjay Kaul joined CNN-IBN’s Sagarika Ghose to discuss the issue.
When asked who should be blamed for power shortage in the country, Suresh Prabhu replied, “We know the problem, we know the solution but unfortunately we don’t want to work on it. This is not something, which should really surprise us because this is something that has been really neglected,” he said, adding, “One of the real problems of the power sector is distribution and transmission because at that end power is not becoming a commercially viable enterprise. People are not adding more capacity. Now again we have shifted our focus to distribution and transmission, which I was trying to do when I was the minister from generation. We need to shift our focus back to generation because we need huge power - about 25,000 megawatts of power. But unless we fix the problem of distribution and transmission, the consumers are suffering because they are not getting good quality power. They don’t get uninterrupted power supply.”
“No, I am not saying generation should be ignored. But while looking at generation, we must look at really on a very focused manner on distribution and transmission,” Prabhu said if distribution has to be fixed instead of generation.
Navroz Dubash agreed with Prabhu saying what happens at distribution end affects generation.
“One problem is at the distribution end which is why it is hard to persuade companies to work on generation end. It is difficult for consumers to understand this but power is a long chain with distribution being just one of it. What happens at distribution end affects generation. Getting to your question, power is undoubtedly a political issue. Not just in the countryside but even in cities. In Delhi we have seen power becoming a political issue. Now specifically with farmers, the issue goes back in time a little bit in the late 70s when power began to be used to get votes."
Dubash also pointed out power was distributed free or as cheap to farmers and meters were no longer maintained. So without meters no one knew how much electricity was actually being used. Over time other people started stealing power that was allocated to farmers.
He also said that India was now in a situation where nobody knows how much actually goes to farmers and how much is being stolen. So we have to unwind a very complicated history and that is why power reforms are very difficult,” Dubash said.
When People's Action President Sanjay Kaul was asked shouldn’t residents of Delhi pay more for power, he did not agree.
“I think we are going way back into time. Today’s situation is different from it was five years back or 10 years back. I don’t one can generalise that people in Delhi steal power. In fact, I don’t believe that there is anything unique in power being a political issue. Water is a political issue, so are roads and so are public transports. The same situation is with water. Forty per cent of Delhi’s water is unaccounted for. Lets look at the distinction. Theft and unaccounted power does not mean that power is not required. That is why I also disagree with Mr Prabhu about the weightage he has given to distribution," he said.
Distribution is eventually an administrative affair, Kaul said. He pointed out that if you don’t have enough of it, somebody is going to exploit the situation. If you had enough of it, we could handle the administrative part of it. Suppose you handle the administrative part of it but you still don’t have the bread. The question is fundamental and it cannot be portioned out. We are talking about portions of a problem. The truth is this that political will has been consistently absence in the delivery of essential items.
“I am saying ‘if you do not have a commodity in enough measure, every thing else is secondary’. Invite the private sector,” Kaul added.
Prabhu, too, concurred with Kaul saying more power plants must be set up to mitigate the issue of power shortage.
“Obviously if you want to supply electricity, you will have to generate more. There is no doubt about it. There is no question about it. For example in telecommunication there is a huge investment and we have added huge capacity because we have as much supply as demand. Why it has happened is because there is huge profit that companies can make. Bharti unheard of 10-12 years back is now making millions of dollars of profit,” the Lok Sabha MP said.
Why do private players not want to come into power?.
“That’s right. Why there is no return on investment is because at the end of distribution when power is already generated, transmitted and distributed, at the end of it you collect the entire power bills. But at the end if you don’t recover after supplying to the consumer, then obviously you will make a loss. If you are putting in Rs 100 to generate and distribute electricity, at the end of the day you are getting just Rs 40,” Prabhu said.
Dubash added, “You don’t recover the cost because essentially a lot of the electricity is unaccounted for. I think going back to the basic question; you need to generate power and that is true. The situation in the power sector is that we pour water into a bucket where about a third of the bottom of the bucket is missing. So basically you generate more power, you pour it into the bucket and a third of it essentially leaks away. Power companies, investors have seen that situation and wonder where the returns are going to come from. They have to come from somewhere. In the past, the government in 1991 with the so-called independent power producer of which Dabhol was the best known, the government basically guaranteed that those companies would make profit, but without ensuring that the profit came from the sector leading to a progressive financial drain on public exchequer. It is that situation which we are trying to unwind. There is no way of escaping the fact that the distribution end is a key part of the problem. To conclude, the problem shouldn’t be blamed entirely on farmers. The farmers are not the wealthy consumers here. There is a lot of theft in the name of farmers.”
However, Kaul disagreed arguing that theft of electricity had dropped.
“On two points, I disagree with Mr Prabhu. One, he gave the analogy about the telecom sector and its profitability. The fact is we look at Delhi where the reforms are supposed to be a shining example and where we have two companies, which were in the pink of health from Day I, they had agreements, which put them immediately in profit. Theft has dropped according to these very companies and are at an all-time low. You are already paying in your tariffs a calculation that takes into account the losses that you make because of non-recovery of dues. These companies are highly profitable. On one hand theft is dropping and people are paying much more that they should be because there is no cross subsidisation. Yet you have a situation where there is a four to six hours of power cuts in Delhi,” Kaul said.
On the other hand Prabhu said that companies who could set up plants were not willing to do so because the sector was not commercially viable.
“Unfortunately we are confusing the issue. The issue is that whatever is the demand; we should be able to supply. Why we are not able to supply is not coming is obviously because those who can put up supply feel that it is not commercially viable to set up supply. Lets take the example of Delhi. Here it is a different case altogether. In fact those power companies who really want to put up power plant and are allowed to put up power plant are not putting it up is a different matter. A very simple question is that in India we are going to need about 20000 megawatt every year for about 20 years. If you need such a huge capacity addition in the country, then the government will not be able to put it up in any case,” he said.
Are politicians to blame?
“There is an Electricity Act, which very clearly states that no free power is possible because if you are giving free power then that should be provided for in the state government budget. It is a provision that we brought in. I had very deliberately put up these provisions in the Act. So that part is taken care of. What I am saying is private sector has to put up power plant and even public sector Company like NTPC, which is a listed company, now have to make investments. If the sector is not commercially viable, why would they make the investments. If they make investments then as Navroz was saying, it is like putting money, which is just going to out of a hole. So it is just going out of the system. So what is important is that if you want more capacity, unless you fix distribution, it is not going to happen. So I am not saying don’t pay attention to generation. Pay more than what we are doing today and while we do that ensure that the sector is commercially viable,” Prabhu argued.
When asked what needs to be done to make power sector commercially viable, Dubash replied, “Let me make two points. First of all it is a complicated sector. So even the distribution companies in Delhi can’t just go ahead and vote in their power plants even if they want to. That has a lot to do with complicated things and how the power sector is structured. It has to do with a shift from what used to be monopoly integrated power sector owned by the government where generation, transmission and distribution were all controlled by the same entity to now where they have all been separated out. A part of the logic of separating them is that the company that distributes cannot invest in generation for reasons of market power and so on. So that’s part of the situation. The larger story about the wholesale shift in the sector worldwide and countries other than ours have had trouble implementing this model. The good news is that the efforts across the country to limit losses are beginning to work. Loss levels are no longer going up like they were through the 90s and the early 2000s. Once we achieve that situation, we will see more investments coming in and the government is taking steps. But that will take some time.”
But Kaul once again had a different take on the issue.
“The biggest hurdle that we see is intellectualisation of the issue to an extent where you do not account for the fact that unless you have the support of the people in the reforms, the reforms will not move ahead. The Delhi example shows. In Delhi, it is merely that the state monopoly has been transferred to private monopoly,” he concluded.
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