Opinion Islands of power
But the costs of insulating the middle class are enormous
But the costs of insulating the middle class are enormous
Delhi Chief Minister Sheila Dikshit was being naïve when she suggested her city should develop an islanding mechanism if another general power failure happened. Large parts of her states population have already made themselves infrastructure islands. Which is why,on Monday morning,people realised the extent of the power failure only after they hit the streets.
It was not only Delhi that remained insulated. In many parts of India,despite the two days without power,life was not disrupted in a major way,apart from the railways. Statistics are not available on the extent of the withdrawal of the population from public infrastructure,but the costs to the economy of insulating the expanding middle class are humungous. For big industry,these blackouts only vindicated their move to island themselves,and their shift to self-generation of power.
Delhis three neighbouring cities,Gurgaon,Faridabad and Ghaziabad,have all but given up on municipal water supply,electricity and public transport. These three cities house a population of 4.5 crore (according to Census 2011) and an alarmingly large number of them build in these costs as part of their routine monthly expenditure.
As for those who cannot afford this islanding,this is possibly the biggest reason they remain poor. Infrastructure connects goods to the markets,workers to industry and the poor in rural areas to urban growth centres,as a government report on the sector notes. Denial of public infrastructure hurts them the most,a fact few politicians understand.
Rather,they might be pleasantly surprised if there is more closure of the grid,as happened for a good part of two days this week. A power ministry estimate shows it incurs a loss of Rs 1.07 for each unit of electricity when it reaches the consumer. Keeping the circuit closed will obviously help the bottomlines of all involved in the sector. By that logic,perhaps it is quite all right to dispense with a full-time power minister. It cuts costs.
For rapidly urbanising India,the costs look different. As per India Energy statistics 2012,of the total electricity produced annually now,over 16 per cent is for residential use. The growth rate of electricity consumption by the domestic sector had already overtaken that of industry,as well as the commercial sector,by the year 2010-11. Since most of the growth in the residential sector is happening in cities,if a good percentage of the incremental growth is captured by islanding equipment like generators,the cost for the economy will be massive.
So the frightening fallout of the serial breakdowns of the electricity grid or the short-circuit in a train at night that leaves passengers no way out,is greater islanding. Accidents,no matter what the scale,can happen in any sector. What spooks consumers is when they seem to happen without provocation. A train smashing into another is as bad an accident as a compartment going up in flames. But the former at least has a cause that is integral to the movement of the train. When bureaucratic lethargy makes every compartment a tinder box,the response of the people is to run away from these death traps. A plan to develop fireproof train coaches is hanging fire for a decade because ministers have not come to the simple realisation that higher train fares can raise money to make the coaches fireproof,among other things.
Its the same way when a national power grid collapses with no provocation. As the reports in this paper have pointed out,grid discipline was fine on Monday early morning and on Tuesday too. Yet because the market was sort of overcrowded as each state turned up to pick up its pre-ordered quota of load,the system failed. The system of relays meant to localise the fault had been turned off by the states and the regulators had looked the other way while it happened.
A former chairman of one of the utilities described how,during his term,he and a state electricity board chairman decided to inspect some of the relays. At a major transformer station near the Ganga river,they went around the place several times trying to locate the relays,until they found a thick patch of grass that had covered up the box and made it invisible for years.
None of those grass-overlaid boxes were expected to work,and none did on Monday morning when the system collapsed. To its credit,the Power Grid Corporation has a fine state-of-the-art system for grid management but that covers only about 50 per cent of the national grid. Even for that,the maintenance cost of the system has had to be slashed repeatedly as the regulators (naturally) tie everything to the final tariff paid by the consumers. So as costs of procurement rose but tariffs remained unchanged,the only thing that gave way was the variable cost of maintaining the system. For the state electricity board lines,this ceiling did not matter as they have not spent on the lines for decades. On an average,their combined loss per year is about Rs 60,000 crore. Clearly,it pays to shut down the system and cut the losses. It is in opposition to the World Bank logic that building infrastructure pays,but then again,we have so often turned such rationales on their heads.
So Sheila Dikshit is right islanding pays. Just as the Indians who can afford it set themselves up as infrastructure islands,the central power utilities have also followed the same logic. They have become islands of profit by ring-fencing their receivables even as the sector sinks. For power ministers at the Centre,these companies provide a great photo-op. In this quarter,PGCIL has posted a 23 per cent jump in net profit,NTPC is not far behind at 20 per cent and others,like their lenders PFC and REC,are also doing just fine.
subhomoy.bhattacharjee@expressindia.com
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