We Really Lack champions In The Power Sector

The current power situation has become the most talked about topic today. Everyone seems to be looking for answers and solutions. In our quest for some insights, InfralinePlus’ Palavi Chakravorty spoke with Harry Dhaul, Director General, Independent Power Producers Association of India (IPPAI) about the current challenges facing the power sector. A man of many words, Dhaul talked at length about the real glitches, government’s failure to address the issues, policy paralysis and what we really need to concentrate on to turn the sector around. Read on:

What according to you is the current scenario of the India Power sector

It’s like a glass half empty. From one side, it looks good; we are progressing in terms of technology and installed capacity but from the other side, the picture is bleak. Investments are drying up, private participation is not being encouraged and distribution lapses are ever increasing. There is no connect between the policies of the state and the Central government, because of which distribution companies are facing huge losses. Plus, a huge amount of money is being lost as there is no accountability of not supplying power. So, yes the scenario of the Indian power sector is bad. However, if we have a leader who has charisma and zeal, the sector can turn around in 12 month.

For power generation, we only seem to concentrate on thermal.why dont we explore the other alternative such as hydro and nuclear ?

Honestly speaking, hydro has a lot of problems. Projects in Arunachal Pradesh are not coming up because of lack of access. Agitating people in Assam are not allowing equipment to move to Arunachal for fear of the Brahmaputra level going further down. These concerns may be unwarranted, but my argument is, the Brahmaputra level was down even before the plant came up. So, hydro will take time, plus hydro will help only during peak season. Remember, 70-80 percent of the hydro plants of the country run only during monsoons, not round the year. Now, we are left with thermal and nuclear. Nuclear was beginning to chug along nicely till Fukushima.After the disaster, everyone got scared, rightly or wrongly we don’t know. After the accident, Germany has switched off its nuclear programme, Japan has reduced and backed down but France has not, in fact, 80 per cent of France’s power supply comes through nuclear.

Logically speaking, it’s about perceptions and concerns we in India have about private sector participation, and we think everything should be done by the Nuclear Power Corporation, which means slow progress, delays, limited money and no transparency. There are also issues about spent fuel and decommissioning. We have always had heavy water reactors wherein we have a three-stage process; however, the reactors that are coming from the US are single-cycle light water reactors, so there will be a lot of spent fuel lying around. How will that be dealt with? Unlike the US, we have one-fifth the land mass and four times the population. So, that brings us to coal; it is not that we don’t have coal reserves; it is just that we don’t invest enough in mining because everything has been given to Coal India, so it has become the monopoly sector of the government. After Supreme Court declaring coal as a national asset, there is further confusion. No one is taking decisions, nobody is taking ownership… We really lack champions in the power sector.

So, basically we are again coming back to the same point coal being the only fuel used even though it is the most polluting

Not at all… if New York can have a thermal-based power plant in the heart of the city and run it without causing pollution, why can’t we? You have desulphurising and other processes to take care of the pollutants. It is just that we don’t care about the environment and all these technologies come at a price. If we do, I don’t see why there should be any environment concerns regarding coal-based power plants.

So lack of policies is the key to solve these issues

There is no point in just formulating a policy, implementation is the key but we also need to change the mindset. Our governments are still not comfortable dealing with the private sector. And the CAG is not solving matters, plus the public private partnerships are a big joke

What is your take on super - critical power plants? Suddenly, everyone is in a rush to invest in them

It’s a lobby. Super-critical power plants are the most efficient and the most expensive, but now there is a lobby to promote it. Earlier there was a lobby for liquid-fuel fired power plants, later when the fuel prices went up; the lobby went dead as well as the plants. There is a 22 MW Wartslla fired plant in Mizoram, which is lying shut for the past five years due to increase in oil prices.

But do we need them?

Don’t we? We do… Supercritical power plants are much more efficient though quite expensive to install. They are also much more fuel efficient and are environment friendly as well. So, they produce power at a lower price. It is basically a comparison between upfront fixed cost and long-term benefits. For example, like in the case of diesel cars, they are more expensive because in the long-term they are a cheaper bargain.

How do you think India can become a manufacturing hub?

India can never be a manufacturing hub. Not till the time we can have the power to sack people, which is why China is way ahead of us. Ours is a welfare state with strict labour laws, to the extent that they are also being misused and misinterpreted. India once used to be a textile manufacturing hub, but after the introduction of the quota system, a lot of orders went to Bangladesh, Sri Lanka and Philippines. There are still small manufacturers who are not able to cut down on their labour due to our labour laws. Besides, we screwed up two of the biggest capital investment projects that came our way — Enron-Dabol and Posco. Who evens want India to be a manufacturing hub? Where is the vision?

Are investments drying up in the power sector?

Completely. There is no sanctity of a contract; it’s like writing on a wall. There were coal blocks that were allocated to various companies, for which mines have been dug up and plants have been set up. Out of the blue, someone has realised that coal is national treasure therefore we must sell power only on a long-term basis to power distribution companies at reduced prices. Result: no merchant sale of power. Do you think such decisions can encourage investment?

There is this whole talk about raising power tariffs by state electricity board

It’s stupid. These electricity boards have 30,000-40,000 employees… for what? Plus, they are handsomely paid. It is understandable that tariffs should be increased when required and they are, but are any attempts being made to reduce costs. Where are efforts being made to outsource work, which is expensive? The Electricity Act has failed; ater 2002 no private distribution company has come up.

What then is the immediate solution?

We need guts. Unfortunately, in the power sector, people don’t have guts. We need a leader who is effective, who has a vision. Everything else is a matter of quick decisions