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Vol. 6 | Issue 5 | Aug 2012

power sector political will
A nation short-circuited
Generation, distribution and transmission failure... problems, problems and no solutions. The crux of the crisis is shortage of fuel. What are the options? Are we going to see light at the end of the day?  
by Neeraj Mahajan
“No nation can aspire to be modern and developed without electricity...No modern machinery can run without uninterrupted and quality power... Imagine New York or London or Tokyo for just one day without power supply… It could bring down governments”.
– Former President Dr APJ Abdul Kalam
It’s impossible to imagine a world without electricity. Don’t be shocked electricity is ‘power’. Either you have it or you don’t. It create three categories of people… powerful (with all the power they want), power scarce or power-scant (cables and poles in place but irregular power) and powerless (no power and no hopes either). Electricity bridges the gap between the rich and the poor and alleviates poverty; while lack of electricity can magnify the effects of death, disease and poverty. Because of lack of clean and reliable energy, 800 million people in India use fuel-wood, agricultural waste and cow dung. According to the World Health Organisation, this is the main cause of indoor air pollution and accounts for 300,000 -400,000 deaths and other chronic health issues every year in India.
Today, there are more people without electricity in India than in any part of the world, and nowhere more so than in UP with 60 million powerless people. At least 10 out of 28 states in India have 25 per cent power deficit. Maharashtra and Uttar Pradesh are amongst the worst with 23 per cent and 22 per cent deficit, respectively. The states most affected by power shortage include Punjab, Haryana, Uttar Pradesh, Orissa, Karnataka, Tamil Nadu, Andhra Pradesh and Maharashtra.
Most of the electricity is consumed in north India. Punjab, Rajasthan, Uttar Pradesh, and Delhi together account for one-fifth of India’s total electricity demand. Still even the national capital region—Delhi, Noida, Greater Noida, Gurgaon, Faridabad and Ghaziabad—face perpetual power problems. Blackouts, a common feature in the industrial areas in different parts of the country, force 61 per cent of Indian manufacturers to use diesel generators – at a roughly three times higher cost. The result is that the real cost of power in India is 39 per cent higher than in China.
Even those fortunate to be on the grid have to face unpredictable power cuts. Gujarat has 11 lakh households without any light. About nine lakh homes use kerosene lamps. Almost 15 per cent of these homes are in the urban areas. It’s a shame that over 300 million people – approximately 35 per cent of India’s population – comprising one third of rural population and 6 per cent of the urban population live without electricity. And even those who do have access to electricity, face the problem of intermittent and unreliable supply. The worst sufferers are agriculture and manufacturing sectors. Power outages, especially in peak summer months, can be as long as eight to 10 hours in north India while some of the other parts of the country are off the grid for over 20 hours at a stretch. India has one of the lowest per capita electricity consumption of just over 500 kWh per person per year compared to 2,600 kWh in China and nearly 12,000 kWh in the US.
Today, India has the fifth largest power generation capability of more than 164,000 MW and the third largest transmission and distribution network. But these figures look impressive only on paper. Despite investments in the power sector since the First Five-Year Plan, this sector has failed to satisfy the needs of its industrial, domestic, agricultural, commercial, public services, railways and other consumers. Industry is the largest consumer of electricity (46 per cent) followed by the domestic segment (24 per cent) .
A politically sponsored system
The domestic and agriculture sector is subsidised by the industrial and commercial users who end up paying 30-60 per cent more for their usage. Power prices vary from region to region. Only 55 per cent of energy generated in India is billed and 41 per cent of this is collected. Over 40 per cent of energy supplied is lost, not billed, incorrectly billed or payment not collected. This amounts to a loss of Rs 47,000 crore annually. Billing only recovers only 69 per cent of the cost.
Thugs all around!
Given a choice, Indians just don’t want to pay their electricity bills. Power theft is a national hobby that accounts for an annual loss of Rs 40,000 crore. From politicians to farmers to the common man — everyone loves to get free power. Around one-third of electricity generated in India is either stolen or lost in the process of transmission and distribution. In some states, this loss is as high as 50 per cent. Uttar Pradesh, Karnataka, Bihar and Andhra Pradesh are the biggest losers. As compared to the world average of 15 per cent, India has the highest loss — which is expected to rise to Rs 1 trillion ($22 billion) by March 2015.
There are two sets of laws—one for the resourceful people and another for the common man. Whereas a common man, who fails to pay his electric bill on time, may face disconnection, the same yardstick does not apply to high ranking people and Government departments who continue to enjoy free power despite arrears worth crores.
States with surplus electric power
Chhattisgarh, Gujarat, Himachal Pradesh, Sikkim, Tripura Gujarat
Dadra and Nagar Haveli

States with deficit electric power
Andhra Pradesh, Kerala, Karnataka,
Puducherry, Lakshadweep
High ranking power defaulter: The Maharashtra Governor, Chief Minister and some 20 Ministers are among the high ranking defaulters The Raj Bhavan owes over Rs 1.2 crore towards unpaid electricity bills which have remained pending for nearly two years. Likewise, electricity bills worth around 12.9 lakh are pending againt Varsha—the Maharashtra Chief Minister’s bungalow. This includes an outstanding amount of Rs 11.4 lakh. Even the State PWD Minister’s bungalow, Ramtek, has overdues worth Rs 12 lakh — the third highest pending electricity bill. The list of other defaulters includes the Mantralaya, Arthur Road Jail, MMRDA, MLA hostels and courts. Many of them owe crores. But still BEST has to supply electricity to them without a penny in return.
Around 8.40 lakh consumers in the State owe about Rs 1,948.86 crore to MahaVitaran-- the state power distribution utility. Many of them haven’t paid their dues since they secured the connection. The maximum number of pending bills are from Marathwada. The 8.5 Lakh defaulters across the State include 5.66 lakh agricultural consumers (Rs 1,709.82 crore), 2.54 lakh residential consumers (Rs 103.66 crore) and 18,587 other consumers (Rs 135.37 crore). The situation is a shade better in the 94 out of the 142 divisions of Maharashtra, including Konkan and eastern Vidarbha regions, where most people pay bills on time and don’t have to face power cuts.
Jharkhand: Former Jharkhand Chief Minister Madhu Koda, currently in jail in a graft case, reportedly misused his official position to waive off electricity bills of Rs 10 crore of a private cement factory owned by his friend Vinod Sinha. The matter came to light when CBI officials investigating rural electrification contracts came across bills raised by the Jharkhand State Electricity Board. This is nothing considering the fact that previous governments had written off electricity bills worth Rs 80 crore in the last 10 years – notwithstanding the fact that Jharkhand State Electricity Board suffers a loss of more than Rs.1, 000 crore per year.
Chhattisgarh: For nearly two years now, the Chhattisgarh government is at loggerheads with the Railways for payments of Rs 1,600 crore towards outstanding electricity bills. The Railways is understood to have raised objections about the billing method and made it clear that it will not pay the bills till its objections are resolved.
Kerala: The Kerala State Electricity Board’s (KSEB) has a perplexing problem. Its single biggest debtor is Government controlled Kerala Water Authority (KWA), which owes the board Rs 1,280 crore in unpaid bills. Other defaulting government agencies include the Agriculture Department which owes Rs 45.27 crore. Some mobile companies are also among the debtors who owe Rs 20 crore to the KSEB. Such Government and private arrears have been mounting over the years.
Gujarat: The State Government has announced a special scheme for 3,56,000 consumers with pending electricity bills. As per the new policy, all home consumers below the poverty line and those whose pending bills are below Rs 5,000 will be eligible for waiver of the pending bill, late fee and interest amount. Those whose pending amount is between Rs 5,001 and Rs 10,000 will be eligible for 80 per cent waiver – that too without any interest charge and late payment charges. Consumers whose unpaid electricity bills are between Rs 10,001 and Rs 1 lakh will get 65 per cent, again with complete waiver of late fee and interest charge. Similarly, for home consumers with arrears over Rs 1 lakh but less than Rs 50 lakh, the relief will be 60 per cent and for those with arrears of Rs 50 lakh to Rs 1 crore it will be 50 per cent. A similar waiver scheme has been announced for people having commercial connections as also those having agricultural connections, with the late fee and interest charge having been waived.
Apart from this, power theft is a main source of loss to the state electricity boards. Power theft is often done with the connivance of employees — serving engineers or retired personnel, line men and their family member. In one case, a retired employee and his son were caught helping tamper meters. Power thefts usually happen with the knowledge of the junior engineers. Illegal tapping of lines and faulty electric meters are among main cause of reduced payment collection.
According to an estimate replacing faulty meters alone can reduce transmission and distribution losses by 29 per cent to 34 per cent.
Ironically, a few states manage to sell surplus electricity because they do not have enough industrial or in-house use. For instance, Orissa and West Bengal have surplus power because almost 80 per cent their villages are unelectrified. Many such states have a vested interest not to make power available to their own people but to sell it at a higher price to power deficit states. The economics is simple — power which costs Rs 1.10 per unit to produce in Orissa fetches Rs 5.50 from buyers in the more industrialised northern and western states. This explains why West Bengal’s SEB registered a profit of Rs 0.76 crore profit in 2004-05 while Maharashtra registered a loss of Rs 1,638 crore in the same year. This brings us to the question why states that pay astronomical rates for power set up generating capacities of their own. The answer is that setting up new generation capacities is not a viable option in India and the biggest proof of this is the ill-health of state-run utilities or state electricity boards, which are on the brink of bankruptcy.
It is a system created by the politicians. For example, a populist vote catching gimmick was Haryana government’s decision to waive off electricity bills of over Rs 1,600 crore. As the Kaul Committee—a Supreme Court-appointed committee—reported on the culture of political interference: “the State Government appears to be exercising unbridled power of interference in the day-to-day working of the Electricity Board. This interference in transfers and postings with political patronage has totally destroyed the autonomous nature of the electricity boards.” Illegal connections are yet another problem that the sector faces. For example, almost 4.7 million people living in unauthorized colonies of Delhi officially don’t have any electricity connection, even though many of the homes have dish antennae’s, TVs and even ACs. All this is allegedly with the connivance of the local politicians-bureaucrats and State Electricity Board Officials.
Even the manner in which Reliance was first allowed to set up a power plant near Dadri in UP by one political party and then prevented from doing so by another party speaks volumes on how decisions in the power sector are influenced by political considerations.
Close to 35 per cent of India’s commercial energy is imported. This is what you get despite colossal investments in 107 thermal power plants accounting for 64.75 per cent of installed electricity capacity and 15 hydro power plants accounting for 21.73 per cent besides 49 gas or liquid fuel-based power plants (about 10 per cent capacity), 19 nuclear power plants (2.78 per cent) and 12 diesel-powered plants. How much have these projects cost the nation is anybody’s guess, considering the fact that each project costs nothing less than Rs 15,000-Rs 20,000 crore to set up?
Underperformance is a way of life
Underperformance is a norm in the power sector where targets and achievement figures are just another way to hoodwink the public. One such utopian dream was the aim to provide power to all by 2012. This envisaged adding 60,000 MW of power generation capacity to make power available on demand, commercially viable, reliable, efficient and overcome energy shortages while improving the quality of supply. None of these have materialised. Given the current pace of work, it will take another 100 years to electrify the 80,000 unelectrified villages.
The power sector has failed to keep pace with the growth in demand leading to a shortage of over 11,000 MW. The southern and the north-eastern regions are amongst the worst hit, with a deficit of 15.3 per cent and 11 per cent, respectively. According to an analysis by Astonfield, which owns and operates solar power plants across India, this deficit is likely to grow to 25 GW by 2012.
The Government has failed to meet the targets for the 9th and 10th plans. According to an estimate India will only be able to produce 1561 billion kWh power against the demand of 5081 billion kWh in 2045. This is the performance of the sector after some $130 billion has been ploughed into it in the past five years, including some $60 billion or so from the private sector—probably the largest-ever private-sector investment India has seen.
The power segment has three main sub-categories- generation, transmission and distribution. Today, India cannot produce more power even if it wants to, simply because of populist politics, over-zealous implementation of environment norms, transmission losses, pilferage, free power to the farmers, bureaucratic tardiness and overall mismanagement.  
Under-utilised generation
A majority of the power plants in India are underutilised. Many thermal power plants are generating way below their installed capacity because of breakdowns, old plants and fuel shortages. Some of them were built using expensive imported technology without much-needed spares for renovation and maintenance. Even technical decisions on where to locate them were based on political considerations rather than economic and technical reasons. What else do you say of a sector where all the business of power is either owned by the Government or big conglomerates and business houses?
One of the reasons for this is that decisions were taken according to whim and fancies of the political masters, based on pitching by foreign equipment suppliers – often ignoring techno-economic decision-making factors like proximity to the market, availability of manpower and long term availability of cheap raw material.
The net result has been that India’s coal-fired, oil-fired and natural gas-fired power plants are inefficient and technologically inferior. India’s thermal power plants emit 50 to 120 per cent more carbon di-oxide per kWh produced. India’s electricity sector consumes about 80 per cent of the coal produced in the country. On an average, Indian power plants consume about 0.7 kg of coal to generate a kWh, whereas in the US thermal power plants consume about 0.45 kg of coal per kWh. Many gas-based power plants, despite the associated benefits of lower capital requirements, shorter construction period and higher efficiencies, are lying idle for want of natural gas. The giant new offshore natural gas fields have delivered less fuel than projected. As a consequence, India has to scrounge on its scarce foreign exchange resources to import crude oil and natural gas to meet almost 25 per cent of its primary energy needs.
Again, many nuclear reactors are operating at a load factor of just 45-55 per cent of capacity due to a shortage of uranium. New projects currently under construction of over 45,000 MW capacities are running behind schedule. These include around 35,000 MW of thermal projects and 10,000 MW of hydro projects, which were scheduled to be commissioned by March 2012.
According to experts, the life of a hydro plant is more than double that of thermal units. Hydropower is also at least 24 times cheaper to produce. Despite this, India’s honeymoon with hydropower seems to be a thing of the past and given the declining trend over the past decade, hydropower plants may soon be a thing of the past. From a hydro-thermal mix of 45:55 during the late sixties, the ratio today is skewed at 25:75. Had it been just the reverse, i.e. 75:25, the average cost of power generation would have been Rs 2 per unit against Rs 3.5 per unit today. Also, this is what happens when power professionals are sidelined while politicians and civil servants take decisions.
Hydro electricity meets 20 per ent of the worldwide energy demand. But despite being the sixth largest producer of hydropower, India has not able to fully exploit its potential in regions like Himachal Pradesh and Uttarakhand. Likewise though 70 per cent of the electricity generated in India is thermal, the coal-fuelled power plants which are supposed to provide less costly electricity are proving to be cost ineffective and unviable. This is because while the load centres are in the northern, southern and western parts, coal mining is mainly concentrated in the eastern region. This necessitates long distance transportation of coal pushing up costs. A large amount of coal is just wasted and discarded as slack coal. Labour unrest and non-availability of explosives are some of the other serious problems faced by the industry. Another dimension of the problem is the lack of coordination with the Indian railways to provide enough number of wagons every day to transport the coal by rail to the power plants.
The average net efficiency of India’s entire fleet of coal power plants is only 29 per cent which is rather low in absolute terms. Most of the coal plants in India also do not have technologies like selective catalytic reduction (SCR) for emission control. The coal used in power stations has large amounts of ash (about 50 per cent) and contain abrasive mineral species like hard quartz (up to 15 per cent) which increase the erosion propensity of coal. Hot corrosion and erosion in boilers and related components are responsible for huge losses, both direct and indirect, in power generation.
Nearly 70 per cent of all coal power plants use technology developed by Bharat Heavy Electricals Ltd (BHEL) which has remained more or less the same for nearly three decades. Commissioning of power plants is highly capital-intensive, with long gestation periods. Most of projects have an operating period of over 25 years and take at least 4-5 years to construct. In between, they have to face shortage of skilled manpower, contractual disputes between project authorities, contractors and delays in commissioning. This is in addition to difficulties in land acquisition, rehabilitation, environmental and contractual issues. 
Another major problem is the anemic production of coal—an important raw material, which provides 55 percent of India’s electricity. Today, Coal India supplies coal to 80 per cent of India’s power plants. And even while the demand for coal is increasingly rapidly many new power plants are beginning operations. There is no solution as to where these plants will source their coal from. Although India has the fourth-largest coal reserves in the world and ranks third in production of coal and lignite, it has not been able to exploit it. On its part, Coal India is cramped by political decisions that require it to sell coal at a 70 per cent discount hence it is not in a position to invest aggressively enough in new mines and technologies. In recent years, new coal mining initiatives have faced land acquisition and environmental clearances problems. As a result, coal supply is not only short but expensive too. Some power producers, who tried to import coal, discovered this when India’s biggest supplier, Indonesia, doubled its coal prices.
Transmission woes
One of the limitations of electricity is that, once produced it cannot be stored for future use. It must be generated and supplied where it is needed. This requires a sophisticated control system to match generation with demand. In case demand exceeds supply or vice versa, it can seriously damage the generation and transmission equipment. Transmission systems in India are too old to take the required load. Also, compared to a global average of 50-60 per cent, India’s transmission lines are loaded to 90 per cent of their capacity. This leads to burnouts, inefficiency losses and difficulty in transferring power from surplus to deficit regions. India has one of the highest transformer breakdown rates, around 20 per cent, as compared to less than 2 per cent in advanced countries.
The five regional grids in India do not have inter-regional connections. This adds to the complexity as during the dry season power is short while it is abundant during the monsoons. Due to lack of transmission lines, poor coordination among regional authorities, technical and financial problems, a truly integrated national grid remains a distant dream. South India is not even connected to rest of the country. As a result, even when electricity is available, it does not reach the end consumer because the infrastructure is lacking. Transmission bottlenecks are the reason why it is not possible to use the wind power produced in Tamil Nadu in other parts of the country. Grid indiscipline is another controversial issue. Recently, the Central Electricity Regulatory Commission (CERC) had to warn Haryana and Punjab to maintain northern grid discipline and cut down on excessive drawls.
Distribution, a loss-making process
Power distribution is a loss-making business in India. There is power available in the market, but the state electricity boards have no money to buy it. It is a system is marred by inefficiency, low productivity and frequent interruption in supply. Ongoing theft, corruption and a politically-motivated pricing structure makes it nearly impossible to improve power utilities in India. The distribution network remains the most underinvested and weakest links in the electricity supply chain. This results in increased voltage fluctuations, unsatisfactory customer service, poor operational and financial performance.
From the Plant to Our Homes
It is colourless, odourless, tasteless. It’s not liquid… but still it flows obeying all the laws of physics. The unique thing about electricity is that it is invisible, anonymous and unbiased. It also does not differentiate between its users on the basis of rich or poor, or for that matter considerations of caste, creed or sex.
Typically, a power producer’s job is to channelise the electricity into a big pool from which it gets distributed to the buyers. Once the power flows over a grid network, there is no way to predict where the power came from or went to whom.
Electricity is generated in a power station at 11-25kV. This is then stepped-up to 132-400kV before being sent out over hundreds of kilometers through a transmission network of high voltage lines. These lines deliver the power into a common pool called grid which in turn connects the nearby cities or load centres through a network of sub-transmission lines terminating into power substations.
Transporting electricity is a very tedious process compared to other goods. It requires split-second timing of electricity flow or else it can result in a catastrophe. At the sub-station, voltage is stepped-down to 11kV for distribution to the consumers.
What concerns the common man is the network of 11kV lines or downstream of the substation. Each 11kV feeder, which emanates from the substations, branches further into several subsidiary 11kV feeders to carry power close to the load points (localities, industrial areas, villages). At these load points, a transformer further reduces the voltage from 11kV to 415V to provide the last-mile connection through 415V feeders (also called as low tension (LT) feeders) to individual customers, either at 240V (as single-phase supply) or at 415V (as three-phase supply). A feeder can be either an overhead line or an underground cable. In urban areas, owing to the density of customers, the length of an 11kV feeder is generally up to 3 km. Against this, in the rural areas, the feeder length is much larger (up to 20 km). A 415V feeder should normally be restricted to about 0.5-1.0 km. Unduly long feeders lead to low voltage at the consumer end.
Even alternate energy resources have their disadvantages. Geothermal energy takes a long time to be installed; hydro-electricity requires ample amount of flowing water, besides hydroelectric dams are known to cause ecological damage; while solar and wind power are intermittent. Also, solar power is the most expensive form of energy and is location specific. It can be used only where there is good exposure to sunlight. While tidal energy is cheap, but it is variable and can not be harnessed everywhere. For this reason, it has not been a success in any country, except France.
Even oil-based energy is not a viable option. Since Bombay High was discovered, India has not found any oilfield and domestic oil production has stagnated over the last decade. Already, India has to import about two-thirds of its oil requirements. The fluctuations in international oil prices are another reason why India should not depend on oil for power generation.
Similarly, the rising cost of natural gas has made it  an expensive proposition. The average recovery rate
of natural gas is only 28 per cent against a global average of 40 per cent. Already 9,000 mw of gas-based projects are facing a shortage of fuel. This is because of poor investment in infrastructure, the pipeline network is woefully under-connected, and many place in South and North-East are not connected to a gas grid.
The latest fad in India is to develop 63,000 MW of nuclear power by 2032. The logic behind this is that operating costs of a nuclear reactor are relatively low. A nuclear plant occupies less space than a conventional thermal power plant and also requires less manpower. Already, India has 20 nuclear reactors in six nuclear power plants. Five more plants (the third highest in the world) are under construction and are expected to be added by 2032. Apart from this, there are plans to construct 18 nuclear reactors (second highest in the world) by 2025. But the point to be considered is that nuclear energy contributes just 3 per cent of the overall electricity generation capacity today. And, this is with transmission and distribution losses exceeding 30 per cent. At this rate, how is it possible to produce three times the nuclear power within 25 years?
Nuclear plants in India are based on imported reactors which cost millions and take decades to build. They need to be operated at full load throughout for a good efficiency. India also doesn’t have adequate uranium and is dependent on foreign providers for import. There are very few suppliers of uranium and its use and transport is regulated by international treaties and groups. In the past, India had to shut many of its nuclear plants because of international embargoes. One of the basic drawbacks with a nuclear plant is that once the process starts, fission cannot be switched off. The reactor has to be cooled for weeks before the material is safe for wet storage. For dry storage, another couple of years of sustained cooling are required. Spent nuclear fuel needs to be handled with care. But there is no foolproof way of disposing nuclear waste fuel. As a result, the area around nuclear waste sites remain dangerous to humans for years. Interestingly, even the US has not built any nuclear reactors since 1978.
In the absence of a viable alternative, coal might remain the king of energy to provide reliable, affordable, and quality power. g 
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