victim of fractured diagnosis

Submitted by VK Gupta on Sat, 27/10/2012 - 5:43am

Power sector victim of fractured diagnosis

Energy efficiency and conservation have become very important for India.
the story OVERVIEW

Power sector is hanging from a high cliff of crisis presently.

Facing criticism from every

direction, this sector is having a hard time keeping on its feet.

Each sector sees this problem with its own narrow-minded viewpoint.
ROHINI BATRA

Chandigarh

Power sector is hanging from a high cliff of crisis presently. Facing
wrath and criticism from every direction possible, this sector is
having a hard time keeping on its feet. What one really forgets to
even notice, let aside acknowledge, the fact that all the
interpretations being served on platter of criticism against the power
sector in India are highly biased. Each sector sees this problem with
its own narrow-minded viewpoint and thus presents a highly prejudiced
perspective of the actual scenario that is. According to MG
Devasahayam, a noted expert on power sector, “Power sector diagnosis
is based on individual sub-sector’s interests and hence, not fulsome.
Each sector presents a new solution every time it opens its mouth to
speak, but more than the goodwill, it is the lobbying strategies
speaking on the larger terms.”

He said that the solutions depend on the effectiveness of a sector or
industry at lobbying. Wrong diagnosis is the sure shot way of bringing
out a report that is faulty in all its aspects, much like building a
castle on marshy land. This then does not let the formation of a
holistic approach take place. As a result, no concrete strategy can be
designed that would lead the power sector out of this crisis and
towards greener pastures. Much of the problems faced by the nation
today can be traced back to the power sector reforms of the nineties.
The Management Model introduced in 1996 created independent
organisations which would carry out unbundled functions of not only
generating electricity but also its transmission and distribution,
thus replacing the government-owned State Electricity Boards (SEBs).
The idea behind this change was to achieve efficiency by a trickle
down process that passes through restructuring, unbundling,
privatisation and tariff rationalisation on cost-plus basis.

Privatisation was seen as the most appropriate way to eliminate the
inefficiencies of SEBs. Not to mention the huge amount of loans
credited from World Bank to fund the implementation of this model that
added greatly to the national debt. Coal sector was privatised as
early as 1993 through the amendment of Coal Mines (Nationalisation)
Act. However, what the eyes of economists of the nation missed was the
bankruptcy that SEBs and NTPC would suffer. It was this bankruptcy
that sowed the seeds of scams like ENRON. The World Bank withdrew its
hands from the Indian power sector in 2002 out of panic, given the
financial situation the sector went through.

Having spent millions of dollars on consulting services and project
formations, the Bank finally left. Despite the passage of Electricity
Act of 2003 which aimed to facilitate private investment and
Public-Private partnership, the power sector continued to traverse the
plunge. It took almost a decade for the Planning Commission to finally
admit that the times of experimentation in power sector had only
worsened the situation, failing to establish any viable model of power
distribution. As per the Expert

Committee on Power that sat together in 2006, ‘over the next
twenty-five years, energy efficiency and conservation are the most
important virtual energy supply sources that India possesses.”