The farmer and the power game

The worst part of the power sector’s problem is that by now in some areas we do not even know what the problem is. Careful work by Amulya Reddy and others in selected areas has shown that what is called distribution loss in rural areas is theft of power, by non-agricultural consumers of unpaid power. When electricity generation growth goes down, the fellow at theend of the last pole suffers the most and most of the time he is a farmer.

Electricity generation by utilities is an important fact, but no one in India looks at it. It is sexier to talk of `fast track’ projects. Growth of power generation was 3.8 percent in 1996-97. It was minus 8 percent in April 97 and 3.2 percent in May. The farmer suffered the most. It was 7.8 percent from June ’97 to April ’98. It was around 10 percent from February ’98 to June ’98 and agriculture was at relative ease. It is low from July and the strain is showing. The farmer, it is said, doesn’t pay for power. There is a lot of evidence that when he gets reliable and timely power, he agrees to pay.

The Rajasthan government started a new scheme called `tatkal’ where if a farmer paid Rs. 1.4 per unit of power, he would get an immediate connection. Last year I went to Ajmer, Udaipur and Chittor. In each district there were more than 15,000 farmers wanting to get the facility and pay for it. In the early nineties, Gujarat wanted astate-of-the-art power system and asked us to study it. Rural power is rationed by time of the day in North Gujarat. We walked down the grid to the 11kv lines. Everybody would put `pressure’ to get priority. They knew it was make-believe and were very willing to pay for power when they wanted it. When last year the Standing Committee on Energy was developing a consensus on the transmission Bill, the thought that it would get through was very pleasing. But we also need reform in distribution. Being a `rural’ man, I walk into the 11kv distribution stations dotted in the countryside. Invariably in the records, even when power is available, one or the other feeders to the village is not working. It makes sense to start reform where people will pay rather than wait for reform as a mantra. Anyway I believe in the Maoist strategy: if you can’t beat them, surround them.

It is good news for the farmer that power started flowing from the East and North to the South in January this year and more is flowing now.

Distri-bution reform will also need to be worked at with some tenacity. Also that by now 11000 MW of capacity has received all clearances and out of these projects, which have financial approval of Indian financial institutions, roughly half are based on Indian fuel sources, hydel and coal.

I pushed these projects very hard, as also helping low-cost imported fuel options. These projects can come into operation in two-and-a-half to three years time and there is no reason in the world for the government to have allowed import of diesel and other inefficient fuels. The argument that this is liberalisation is thin since the final price of power is guaranteed and so this `fuel’ option only encourages corruption and guarantees high-cost power.

The wavering of the reform stalwarts like Rajasthan and Haryana is bad news. It is here that the question of `political commitment’ is becoming acute. There seems to be no way out from the political organisation of potential beneficiaries of decentralised markets andeducation. Forthright speaking by the CERC may also help. The good news was Orissa withdrawing the 12 percent tax on coal. Mega-projects should now be pushed. The Coelho Committee on distribution reform needs very urgent and serious attention. Apart from organisational and procedural details of an important kind, it had made the point that the `availability tariff’ would help inter-regional integration.

We really sorely miss a vision in the power sector. There seems to be no plan to finalise the Ninth Plan. We really planned the STP technology and institutions to build and run it. We have no plans for training one and a half million workers in the distribution of power. There is hardly any worthwhile technology policy. The high-level groups seem to be hibernating. Fortunately the blue-ribbon boards of the navratnas seem to be functioning and my successor has followed the policy of professionalising the appointments in the power sector, which were a part of ministerial privilege. Also, it is reported thatthe energy efficiency legislation approved by the UF cabinet has been changed. It is high time a debate started on the new idea, since this has to be a people-oriented legislation.Finally, with projects having a capacity more than 22000 MW given all government approvals and more than half of them given backing by Indian FIs, it is somewhat incomplete to argue that only lack of political commitment is holding back the Indian power sector. An interesting feature of the G7 power companies has been that while they were critical of sanctions on India, once they were imposed, they fall in line. Indian power companies also need to get their act together with their government.