Opinion Power and no accountability

The two successive blackouts underscore: one,the regulatory and governance failure in enforcing significant elements of the prevailing legislative and policy framework and adherence to consequent standard practices and procedures that the executive and operating arms should follow; and,two,the incompetence,arrogance,indifference,suppression of dissent and expert opinion,and the absence of any form of accountability that permeates those in authority in the Indian power sector.

At the heart of the malaise is the failure to consistently appoint professionals with relevant technical competence and proven track records to positions of authority in key economic sectors such as power. General administrators buoyed by political patronage get promoted to top regulatory and executive positions,thereby rendering decision-making captive to the prevailing realities of the political economy and its compulsions. This dangerous mix relegates techno-economic considerations to non-consequential levels. What were the compulsions that constrained the grid operator from curtailing overdrawal despite the technical capacity to do so? Was one more “warning” to a repeated and habitual offender a sufficient regulatory action?

A second uncomfortable truth behind recent events is the overemphasis on generation investments in the power sector since the First Plan. Even in their best years,transmission and distribution investments have remained below 40 per cent of the technically desirable level for the corresponding actual level of investment in generation in such years. An integrated grid operating synchronously is only as robust and as resilient as its weakest link. The various segments/components of this integrated grid in India are not identical in their technological sophistication. Available technologies that integrate information and communication technologies to deliver self-healing grids that automatically isolate grid disturbances must be uniformly incorporated in all elements of India’s integrated grid. This must be supported by regular modelling and simulation of grid behaviour under different scenarios and the results applied to protection settings that ensure grid security,reliability and efficiency. All this entails massive investment in transmission and distribution. Such investments have been lacking.

A third fact often lost sight of is that the entire Indian power system is operating constantly at the outer limits of its available technical capacity/capability. Tall claims of addressing the supply-demand imbalance and meeting the required human and physical capacity/capability needs have fallen flat year after year because of ignorance about what is required to address the constraints that each element of the electricity value chain faces. This is compounded by an incentive structure that drives bankrupt state utilities to maximise short-term objectives even when a long-term perspective is essential. One must wonder how the Central Public Sector Undertakings (CPSUs) in the power sector,including the Power Finance Corporation,are all triple A-rated entities when their only clients are all bankrupt. The hard truth is that the power sector CPSUs are equally,if not more,responsible for the bankruptcy of the state utilities. And those who talk of low tariffs and free agricultural power as the cause of this bankruptcy simply do not understand ground realities and are ignorant of the fact that average tariffs in India,inclusive of all cross-subsidies,are among the highest in world already.

The Electricity Act,2003,established the necessary legislative framework for nurturing reform and delivering a power sector under independent regulators with competition in every element on a level playing field. We have failed in realising this vision. The Indian power sector remains uncompetitive and a drag on the economy,just as several other essential infrastructure sectors providing various public goods and services. While the recent blackouts are the current flavour of the day,the truth is that in sector after sector there are daily occurrences that are reminiscent of a struggling third world economy reeling under poverty and lack of access to essential infrastructure and infrastructural services. Repeated assertions of and complete obeisance to the largely meaningless single parameter of GDP growth have clouded our appreciation of the myriad daily disasters that the economy tackles and the disasters waiting to happen due to failing or absent infrastructure and infrastructure services.

One possible solution might be to move those in positions of authority from Lutyens’s Delhi and similar precincts in state capitals and require them to work from areas and facilities where the common man makes a living. This would be a sure win-win because,apart from giving our leaders an appreciation of the fact that the current development paradigm is simply unsustainable,it would reduce the need for overdrawals by errant states.

The writer,formerly principal advisor on power and energy to the Government of India,is visiting professor,Lee Kuan Yew School of Public Policy,National University of Singapore

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