Lighting up the power sector

The UPA had a junior minister for power, a retired non-performer for renewable energy and a coal minister who resigned under a cloud. The NDA put its bright ministers in charge of three related ministries—power, renewable energy and coal. There is a holistic approach to the issues but nuclear power must be included, and close coordination with petroleum and gas ministry must be ensured.

India’s energy problems are due to the lack of an integrated holistic vision of the sector, poor attention to detail, and poor planning by governments at central and state levels. The problem is not distribution alone. Its concurrent nature in the Constitution puts distribution and retail tariffs with state governments. The statist philosophy of the Congress led to the continued dominance of the central public sector in generation and transmission, and by state governments in state-level generation, distribution and load dispatch. This led to pandering by governments to their own enterprises.

When independent regulatory commissions for tariff determination were created, they were also almost entirely manned by retired bureaucrats (not economists, management specialists, energy specialists). This made many subservient to governments.

The government allowed high debt (up to 80%) in electricity investments and asked nationalised banks to lend the funds. Today, over R3 lakh crore of bank assets are non-performing. Utilities, especially electricity, are funded elsewhere from long-term savings in pension funds, etc. In India, banks lend for these long-term investments from short-term deposits, and interest costs are high, reflected in power tariffs.

Crony capitalism and non-supply of gas and coal has led to stranded generation capacities. Coal India has reneged on supply commitments of coal, many times of poor quality, with expensive damage to turbines. Open access, freedom to buy from any supplier in India, was disallowed by many state governments, leading to substantial quantities of cheap power left unused.

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