Join this power trip

Has anything changed? Well, I point to a conference where representatives from Reliance, the Birlas, Godrej, and other industrial groups met Mulayam Singh Yadav and Amar Singh. They discussed development, not donations. While the meet provoked debate, it was limited to the economic viability of putting up private power plants in the state. If that isn’t a healthy development, tell me what is!

Personally, I was delighted to hear that Reliance was putting its money where its mouth is, namely investing Rs 10,000 crore to put up a 3,500 MW power plant in Uttar Pradesh. Forget the political colours of the parties in power in Delhi and Lucknow, the fact is that India can’t progress unless Uttar Pradesh — home to one in every seven Indians — makes positive strides. (One of the few things that gives me nightmares is the thought of someone as lackadaisical as Laloo Prasad Yadav at the helm in Lucknow.)

The announcement epitomises what can happen when both the federal and the local administrations are determined to make progress. The Reliance project would never have made it even to the planning stage if not for the Electricity Act passed under the auspices of the Vajpayee ministry last year, and if the Government of Uttar Pradesh hadn’t followed up with its own new policy on power. I just pray that these were only the first steps in the much-needed reform of the power industry, a sector that has been a notable laggard.

The so-called ‘‘reforms’’ introduced in the Narasimha Rao era were so ill thought out that they hardly qualify as a bad joke. It was in those years that someone recommended putting up power generation units in coastal areas with imported fuel. Potential investors were offered 16 per cent returns — unheard of in any major industrial nation — to sweeten the pot. This policy can be summed up in two words: Dabhol and Enron!

This truly spectacular piece of poor conception proved even worse in execution. Private investors discovered that there would be no hassle-free method either of selling power or of collecting their dues. Small surprise then that honest investors stayed away in droves with only the likes of Enron stepping in.

I still remember a single stunning statistic cited by Jaswant Singh, then finance minister, in the debate on the vote of confidence moved by the short-lived first Atal Bihari Vajpayee ministry in 1996. Not a single additional mega-watt of power, he said, had been added in the five years of the previous Congress rule. But with ‘‘secularism’’ rather than ‘‘development’’ being the hot issue of the day, nobody bothered to debate why this was so.

The Electricity Act of 2003 was the first genuine measure designed to let the winds of liberalisation sweep away the cobwebs that festoon the power sector. (The kudos should be directed to Suresh Prabhu, the Union power minister who did the most to craft this crucial piece of legislation.) Uttar Pradesh is one of the first states to take advantage of the new opportunities that opened up. We all know that the state ranks fairly low in the development index; one measure of development, accepted globally as an index, is the consumption of electricity — in Uttar Pradesh it is a mere 188 units per head compared to a national average of about 400.

The Dabhol plant threatened to cost the consumer a whopping Rs 8 per unit; the Reliance plant promises to deliver at Rs 2 per unit. Perhaps the massive size of the unit — 3,500 MW — provides economies of scale. Be that as it may, the message has gone out loud and clear: it pays to invest in electricity generation in India.

Cynics say the plant in Uttar Pradesh owes much to the personal relationship between the Ambanis and Amar Singh, Mulayam Singh Yadav’s right-hand man. It suffices to quote Anil Ambani: ‘‘There is brotherly love, but never brotherly economics.’’

(I can’t help wondering what the late, great Dhirubhai Ambani would have made of the investment. I can almost hear him, the father of the ‘‘Think Bigger’’ school, demanding, ‘‘Why not a 5,000 MW plant?’’)

Happily, Uttar Pradesh is not unique; there are four more power plants coming up in south India, three in Andhra Pradesh and one in Tamil Nadu, totalling 1,100 MW. Seventeen other projects, meaning investment of roughly Rs 20,000 crore, are on the drawing-board. And did I mention that not one requires imported fuel?

Economic reforms are paying off for ordinary Indians in fields such as communications (the ubiquitous cell-phone); it is time we start to enjoy them in infrastructure as well in the form of decent roads and better power supply. May I hope the new power minister in my home state, K. Muraleedharan, is paying attention?