muddle all the way!

letter sent to press on 18th July, '03 - not much has changed since then:

After years of debate, it was generally decided that the way out of the crisis situation faced by the key power sector, in nearly the whole of the country, was privatisation. Almost a decade was then lost pursuing privatisation at the wrong end, leading to any number of fiasco’s, the most infamous amongst them being Enron, and our own Cogentrix. Finally, it dawned on the powers that be that unless the revenue end, that is, ‘distribution’ was privatised, there can’t be much progress. Power being a natural monopoly area, it was then correctly decided that regulation had to be introduced, and accordingly, bodies like the Karnataka Electricity Regulatory Commission (KERC) were instituted.

The KERC’s mandate, one thought, was to facilitate the process of take over by the private sector speedily, so that they could in turn effect the system correctives and ensure quality power supply to the consumsers. The transfer arrangement is certainly no child’s game, and, while every effort could be put in to make it as equitable as possible, there’s always the chance that it could land up slightly skewed in favour of the service providers (Hopefully, lessons have been learnt from the ‘Tannirbhavi’ deal, which landed up considerably to the advantage of the IPP, and the Orissa experiment, where reforms remain stalled largely because of the arrangement being too heavily skewed against he interests of the service providers). However, that should not come in the way of moving ahead, keeping the ultimate objective in view. Unfortunately, however, that is exactly what appears to be happening in Karnataka. Quite as stated by a KPTCL official recently, the KERC is today acting more like a consumer forum.

It is very correctly said that ‘costly power is still cheaper than no power at all’. And, when you take into consideration the cost of ‘quality’ power, you must compare it against the current tariff, to which must be added the costs of installation and maintenance of gensets, inverters, converters, emergency lamps, candles, match-sticks, and what have you. Further, once the system correctives are effected, there will always be the scope to lower tariffs, where the KERC has an important role to play. Also, if a service provider continues to charge too high, now with the new central enactment, any set of people can team up together to meet their own demand, and say good-bye to him. This is in fact what a lot of business establishments are already doing, and a factor that will continue to act as an effective deterrent against profiteering by the service providers. No business, whatever its position, wants to lose clientele.

All in all, what is required today is for the KERC to stop nitpicking, and change its outlook to take on the role of the facilitator that it is meant to be.

Kerala power muddle

The following note was written in Sept, '01 at the instance of an eminent environmentalist and adviser to the Govt of Kerala. Though he did submit it to the government with his forwarding note, the government did nothing about it, and the position in Kerala remains as precarious as before:

Kerala had all along been dependent almost totally on hydel power. This led to serious crisis situations in the state whenever the monsoons failed. To address this, the government, a few years back, decided to promote thermal power generation in a large way. This has resulted in the setting up of close to 650 MW of capacity upto now, as against the hydel capacity of nearly 1500 MW, providing for a fairly healthy balance. This, however, is mostly on paper.

The thermal plants are based almost totally on petroleum products, ie HSD (high speed diesel) and Naphtha, both of which are largely import dependent. With the international prices of these products rising steadily over the past few years, the cost of thermal power generation has also been steadily going up. The KSEB, the state-owned monopoly distribution utility, is however unable to pass on the increased costs to the consumers on account of a number of reasons, including political, and is in turn accumulating losses at a rate that is becoming increasingly unbearable. As a result, the thermal plants are being used mostly to address emergent needs, leading to severe under-utilisation of capacity. Under the circumstances, the government has again been forced to look at increasing the hydel generation capacity, the running cost here being extremely low. But, what the government refuses to take into account is the enormous cost it is subjecting the future generations to, in the process, through submersion of the life-giving rain forests.

Through all this, the government has chosen to remain blind to a third alternative, which addresses all of the state’s problems, and is also very cost effective.

Now, what the state needs is electrical energy at the most competitive price. For that, it is not necessary that it has to be generated within the state, as apparently has been the thinking all this while. India has vast reserves of coal in the states of Orissa, Madhya Pradesh, Chattisgarh and Jharkhand, where besides, the burning of these also does not cause serious environmental imbalances. This apart, the problem of fly-ash can also be easily sorted out by pumping it back into the used-up pits. All in all, therefore, the simple thing to do is to mine the coal in these places, burn it and generate the energy also here, and feed it into the grid to be transmitted down south to states like Kerala. The Talcher (Orissa), Korba (Madhya Pradesh) and other super thermal stations of NTPC ( National Thermal Power Corporation) are already doing a fine job of generating power in these places, and the PGCIL (Power Grid Corporation of India Ltd) is presently in the process of putting in place a 1000 MW direct HVDC (High Voltage Direct Current) transmission line upto the centre of South India ( near Kolar in Karnataka) to evacuate the power, from where, it is to be distributed to all the southern states, including Kerala. With the in-built efficiencies in every aspect of this arrangement, this will easily be the cheapest source of thermal power that can be made available in any part of the country. If Kerala wants more power, all it has to do is to tie up with NTPC and PGCIL to enhance their capacities, possibly through a funding arrangement on the lines of the Konkan Railway model. The state can use the power thus imported to take care of the base loads, and use the existing hydel capacity to meet the peak loads

After battling for years together with generating power using coal transported all the way from Talcher, via Chennai and Paradip ports through a rail–barge–rail route, and paying through its nose for it, apart from making the city of Raichur almost unlivable because of fly-ash pollution, the Karnataka government is finally looking at switching to the model described above for all future capacity additions. Karnataka has learnt its lessons the hard way. Kerala does not have to.