Crux of the problem

This letter was sent to the press in June '05, and tragically it is still as valid today:

Whenever the power situation reaches crisis proportions, which has now become an almost everyday occurrence, the politicians immediately come up with talks of setting up fresh generation capacities, with gleaming eyes, since that would mean mega projects, which would automatically translate to mega kickbacks. So much so, the Maharashtra CM recently staged a big show of signing up MOU's with leading industry houses for setting up capacities of the order of 10,000 odd MW in the next three years.

The fact of the matter, however, is that simultaneously a lot of the existing generation capacity in the country is idling. The NTPC, the biggest generating company in the country, for instance, is recording only around 50% PLF overall, which if raised to even 75%, can effectively tackle at least the crisis situation across the country. The NTPC has the reputation of being a world - class company, and, if it is not performing to capacity, it is only because its customers, largely the electricity boards, are not in a position to pay them on time. The crux of the problem lies here. So, setting up fresh capacity without figuring out how to enable the electricity boards (or the DISCOM's, the creations of the unbundling process) to effect payments to the GENCO's on time, is pointless. And, the truth of the matter is that no government - run distribution company is making profits, nor can they ever do it, whatever their structure. Simultaneously, however, the private sector distribution companies in Mumbai, Kolkata, Ahmedabad, Surat, Greater Noida, etc, which have been operating for decades together, are making fairly decent profits, and the NTPC and the other GENCO's are happy supplying them. As such, all these cities are riding through the summer comfortably, whereas the others are sweating it out.

Thus, the problem as well as the solution are as clear as daylight - privatise, privatise, privatise - the distribution. As far as cities are concerned, the route to follow is the one taken by Delhi recently, where the whole of the city, earlier supplied by DESU, has now been divided into three zones - two them taken over by TATA's and the other by Reliance. In a natural monopoly situation, this arrangement provides for a ready comparison of their respective services, and thereby regulation, apart from the regulation undertaken by the State Electricity Regulatory Commission (SERC). And, as for the rural areas, there is the example of the Hukeri Co-op Society in Belgaum district in Karnataka, which has been doing a most remarkable job of undertaking distribution amongst village communities, all of them its members, from decades together. It buys power in bulk at high voltage from the Karnataka Power Transmission Corporation (KPTCL), arranges its distribution, collects money, and remits it to KPTCL on time, thus ensuring quality power supply from them, and in the process, keeping everyone happy. Where this model may not be feasible, particularly in geographically isolated communities, stand alone solar systems are a far more sensible option, than running kilometers of transmission lines.

So, the answers are all very simple, and readily implementable. All that is required now is for the people to start demanding that the government no longer continues as the dog in the manger.