That electric touch

The prime minister8217;s tough talking on power should have kept all the chief ministers awake 8212; a photograph in this newspaper yesterday showed some of them in a less-than-attentive posture during the national conference. CMs that fail to deliver on power supply risk losing political power, even if their state is doing well on other economic parameters. Indeed, high growth and low power supply is ironically a worse combination for an incumbent government than low growth and low power supply; the former causes more acute frustration. Dr Singh8217;s agenda includes a Vat-like road map to reform the power sector. He has proposed a standing group of state power ministers under the chairmanship of the union power minister. They would be assisted by a National Power Project Management Board, which in turn will work with the power ministry. The Board will track all projects to be completed in the 11th Plan. This sounds sensible. But let8217;s keep in mind that the corridors of power are littered with dead power reform initiatives.

The very first obstacle the standing committee will have to face is the system of perverse incentives. It is these that have crippled investment in the sector. The problem is not generating funds for the massive investment projection of Rs 10 lakh crore, which can help generate 78,000 MW in the 11th Plan period. Some states have offered massive concessions to power developers. Some of these concessions have attracted political flak. And parties that support certain projects when in power, find fault with them when in opposition. Unsurprisingly, against the 10th Plan target of adding 41,000 MW, the capacity addition has been only 21,000 MW.

There are certain quick reforms held up by nothing other than the establishment8217;s quirks. There seems to be some resistance to the idea of power trading across national boundaries. Old security fears cannot hold up new economic measures. There is even more resistance to allowing open access as promised in the Electricity Act. This can bring in an additional 6,000 MW into the system. That order of supply increase, achievable simply by changing a few rules, should have been welcomed by all. But open access is apparently anti-people. Surely, it is not more anti-people than power cuts?