Poverty Pinches

from Hard News India

A majority of people just cannot afford to pay for electricity

Hardnews Special

Last summer in a Kanpur locality, women padlocked the neighbourhood power station, which was refusing to listen to their complaints of frequent outages. For days together, they alleged, there was no power supply to their homes, where their children were preparing for examinations. Television images of distraught and angry citizens outraged by erratic power supply and threatening to take law into their hands had become a common feature. Power crisis, in many parts of the country, had become an internal security problem.

Discontented and angry citizens posed a threat to electric substations. Reports abound on how the distribution infrastructure, instead of being energised, is routinely vandalised, putting paid to the efforts of planners to provide access to electricity to the masses.

What compounds the misery at all levels is the leakage in the distribution of power. By a rough estimate 40 per cent of power is pilfered before it reaches its destination. The causes of this monumental theft are many. Besides the fact that there is absence of rule of law and quality governance in large parts of the country, one major factor for this is the rampant poverty in urban and rural areas. Many people just cannot afford to pay the price of power and it is easier for them to just sling a wire over distribution lines and enjoy electricity as long as there is supply. The failure of distribution agencies to provide assured supply gives rise to unlawful behaviour.

For a host of uncomfortable reasons, the government is not willing to own up to the problems of extreme poverty and lack of purchasing power that is derailing ambitious plans of the central government. “The assumption that people will pay is erroneous”, claims Surya Sethi, an advisor of Planning Commission. The National Common Minimum Programme (NCMP) promised electricity for all in five years. The Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY), or village electrification programme, promises only access. The gap in the two mandates shows ambivalence about the disturbing reality.

There are just too many people who need electricity, but are in no position to pay. Providing access means that only those who can pay would be able to enjoy it. Assumptions go awry due to the flawed quantification of people living below poverty line (BPL). The official figure is 25 per cent, but, as Surya Sethi says, a more realistic estimate would be all those earning $1 a day, which works out to about 35 per cent of Indian population. In real terms, this means 35 crore-odd people barely earn enough to survive. These people just do not have the financial flexibility to buy a unit of power every day, let alone use it for the whole day round.

What adds to the overall gloom is that the targets that are fixed in the Five-Year Plans are just not met. The target during the 10th Five-Year Plan was 41, 000 MW, but the mid-term appraisal showed it would not be able to reach even 28,000 MW. For the Eleventh Plan, the estimated capacity addition is projected at 72,000 MW, but the country does not have the financial resources to generate this amount of electricity. China, which is always compared with India on most human resources and industrial indices, manufactures 80 per cent of power equipment, which is 12 times more than what India manufactures. The worrisome part is that the manufacturing capacity is overloaded and there is no way it can be increased till more power equipment manufacturing companies, like BHEL, are created.

Why are these targets so way off the mark? Isn’t the political leadership of the country aware of these fanciful targets? The problem lies in the inability to own up to the truth and scale down a target if it has not been met earlier. “It becomes difficult to set a lower target than what was in the earlier Plan,” explains Sethi. Authoritative sources say the top echelons of the government recognise the problem and also realise that it is not delivering, but they cannot really do much, as it would show their inadequacy.

One of the glaring omissions in thinking about the future of power sector is not enough attention is paid to the untapped energy sources. According to “India Power Sector 2006, though India is fifth globally in “consumable hydro-electricity capacity”, 78 per cent of it remains untapped. Only 17 per cent of the hydro-electricity capacity has been reined in and five per cent is being developed further.

The government brought in reforms to revive the fortunes of the bankrupt state-owned electricity boards. They promised to privatise distribution to prevent larceny. In Delhi privatisation failed to sort out the problems of distribution. Consumers have been angry with the speed at which the meter moves and also the quality of electricity. Outages still baffle the local government leadership.

Some of the states have been able to initiate reforms with some measure of success. Others, like Uttar Pradesh, are still trying to get their act together.

The shortfall in power is to be met through the proposal to set up Ultra Mega Power Plants (UMPPs), which will generate 4,000 MW or more. These power plants are meant to attract big private sector investment. Many of the big private players are bidding with conditions, as they believe they may have problems in getting environmental and other clearances.

The other ticklish issue is the price at which power is to be sold to the consumers. NTPC has shown that if it gets all the facilities that the UMPP have got, then it could generate power for less than Rs. 1.50/unit. Any private player would have to match NTPC rates before it is entertained by the state electricity board. The flipside is that whoever is able to bag and build a mega power project then that company would be in a different league altogether.

Private players, who are showing a lot of excitement for the policy of power ministry, are also a bit uncertain whether they would be compensated for the electricity they generate. They fear state control and politics could ruin their best-laid plans.

The goal of electricity for all would need a holistic solution, and it simple cannot just be addressed by those who believe in a short-term technological fix. The government would have to ensure that higher outlay in social sector and use tools like microfinance to raise purchasing power so that the disenfranchised masses can feel the glow of power.