It may be shocking to know that although the energy generation per kilo watt (KW) of the installed capacity at 4800 units is the highest in the world, the energy consumed for production is less than 50 per cent of generation due to high inefficiency and pilferage in between points of generation and consumption. What's worse, some of the SEBs like KEB, APSEB and HSEB earn their revenues only by selling one-third of the energy generated and the rest is all lost. This explains why their revenues per KW of the installed capacity is low. Other SEBs are also culprits of these ailments and despite frequent hike in power tariffs, their revenues are not increasing in proportion to their growing installed capacity. Once this information of energy consumption is available to the public, the power sector will be completely exposed.During the last 27 months of the current plan till June 1999, the energy generation has increased by about 6 per cent annually. However, the growth of energy sales is hardly 2 per cent basedon the information compiled in respect of major SEBs and in fact there is only a marginal growth if the agricultural consumption is excluded. As is known to planners, agricultural consumption is not metered and merely estimated to hide inefficiency and corruption. The question naturally arises why the country is investing large sums of money when additional generation is completely lost and does not reach the consumers due to several constraints. The demand for power is certainly growing but the sub-transmission and distribution is so weak that the power generated cannot be transmitted to consumers. The lack of transparency in statistics may prove fatal as any planning based on incorrect statistics may lead to increasing the cost of power.Let's be very clear about the objectives of reforms in the power sector. The underlying philosophy of electricity privatisation in the UK as expressed by the House of Commons Energy Committee is that ``greater competition will create downward pressure on cost and priceand ensure that the customer and not the producer or distributor comes first.'' The power tariffs in UK and in the advanced world have already been reduced by 15-20 per cent and many countries have planned to get it further reduced by another 25 per cent in the next five years. In India, however, reforms are perhaps meant to help the generators and distributors at the cost of consumers. Power planners have not given any indication to the public of the likely tariff in future, which may exceed Rs 10 per unit from Independent Power Producer (IPP) Mega Power Projects and the proposed Power Trading Corporation. This is the key issue before the planners and they appear to be afraid to face public backlash once they indicate the power tariffs. At present, the average sale rate of power is only about Rs 1.75 per unit and it requires to be trebled in order to make the power sector viable. In actual practice, hike of this extent is impracticable.In market economy, efficiency is extremely vital for generators anddistributors to compete. Due to intense competition, the efficiency of combined cycle plants has risen even to about 55 per cent much higher than coal-based thermal power stations. The overall efficiency in the developed world from generation to the manufacture of finished product is about three times that of India as losses have increased to a level of about 45 per cent and the efficiency of equipment in use continues to be poor. This situation can't continue if the nation has to be globally competitive.The cost of energy - which was amongst the lowest in this country till the end of the Seventh Plan - has already become the highest due to lop-sided planning. As the percentage of new costly installed capacity increases, the average cost of energy will rise substantially. In fact, it has been a blessing in disguise that we failed to achieve the Eight Plan target and the Ninth Plan is also heading for failure. During these two Plans, new capacity addition may be hardly 36,000 MW or only 50 per cent of theeconomical earlier installed capacity at the end of the Seventh Plan.Giving high hopes for IPPs was a brilliant tool to distract public criticism. The foreign investors are now gradually withdrawing their proposals on account of the frequent changes in the policies.Misleading advertisements in the newspapers said that the target of installed capacity of 3,300 MW during last year was exceeded by 1000 MW, although according to Ninth Plan document, the average target per year is about 8,000 MW and not 3300 MW. PSUs have very cleverly worked out energy shortage at only 5.6 per cent although the actual shortage during the peak time exceeds 35 per cent. A low figure of energy deficit has been indicated by averaging the peak shortage over 24 hours although the actual shortage is only for four hours. In the last two years of the plan, only 7,200 MW of new installed capacity has been added and in the current year about 4,000 MW may be achieved. Based on this trend, the installed capacity addition in the NinthPlan may not exceed 20,000 MW although the Ministry of Power is still harping on capacity addition of 40,000 MW.Large number of notifications rush out from the Pandora's box without any purpose. There is no doubt that the ultimate solution lies in privatisation but there are too many obstacles in the way. Our politicians and bureaucrats may not like to part with the authority they enjoy and there cannot be any retrenchment of heavily over-staffed employees. There is no inventory available of the assets and it may not be an easy task to induct the private sector. Delhi is the best example for privatisation but the Government has failed in making any headway. The Centre must put its house in order first instead of blaming the SEBs.The quality of power has deteriorated for which NTPC and PowerGrid are squarely responsible. Consumers are not aware that their equipment are getting damaged due to high frequency and low-voltage. Certain wrong decisions like clearance of the Dabhol Project in Maharashtraagainst the recommendations of the World Bank and Central Electricity Authority provide glaring example of fearlessness of bureaucracy, which may financially cripple the best SEB. Its loss per year is estimated at Rs 5,000 crore which may not only render the SEB bankrupt but the state government also. There are large number of such instances like Mega Power Projects, IPP Stations and Power Trading which are all based on adhocism.Commercial losses have mounted to about Rs 50,000 crore. The central dues for earlier years and depreciation provision are not reflected in the commercial losses although it is the primary responsibility of the Power Ministry. Unfortunately, after 1983, no report is available on the financial working of the SEBs. The plan panel deserves accolades for atleast publishing the provisional figures which can serve as an indicator of the power's sector health. I find plan funds being diverted to meet revenue expenditure and it appears that all development works may come to standstill soondue to uncontrolled diversion. There is no monitoring of the proper use of finances either at the Centre or at the state levels. This is going to be much more serious than shortage of power as the SEBs may not be even able to maintain their existing assets.The author is the former Chairman of CEA
