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COVERSTORY: GOVERNMENT
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Suresh
Prabhu
Power
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| Fast
Track to Slow Reform |
Ministers:
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2
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Joint secretaries and above:
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4
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No. of PSUs referred:
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NA
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Budget in Rs cr (2001-2):
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2881.8
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The
critics of Union Power Minister Suresh Prabhu-a Shiv Sena MP- have a major
handicap: it's almost impossible to criticise him. That's because he is
one of the most vocal critics of India's power policies. He reels out
figures that could scare you stiff. Sample this: at the current rate of
electrification, it would take Bihar 800 years to electrify the whole
state. Or every year power worth Rs 20,000 crore is pilfered. Or return
on investments in state electricity boards (SEB) has dipped to -19 per
cent.
Prabhu is honest and clever. More than anyone
else, he knows that failures in his sector are too evident to be justified.
From the recurring headlines of companies like Enron and AES wanting to
pull out of India to the endemic power shortages all over India, power
is in the news for all the wrong reasons.
|
|
|
| Promptness of response |
10 |
| Understanding of issues |
9.0 |
| Commitment to reforms |
9.0 |
| Openness to ideas |
9.0 |
| Achievements |
1.5 |
| Average score |
7.7 |
| OVERALL RANK |
2
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| All ratings are on a scale
of 10 |
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"Depending
on whether they're in power or opposition, parties support
or oppose power reforms. This has
to end."
Suresh Prabhu
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Being 11 months old in the Power Ministry, Prabhu
can choose to hide behind the legacy of his predecessors. Or take refuge
in the fact that reforms in the power sector are in the states' hands.
But he doesn't believe in alibis. "As the power minister I must take
all the blame, whoever may be at fault."
Within six months of signing the first Enron
deal in 1993, some 240 private power producers had shown interest to invest
in new generation capacity of over 60,000 MW. Yet, only 10 private plants
with a capacity of 3,681 MW were operating in July 2001. The euphoria
over private power generation died a premature death because the sole
buyers of power were chronically sick SEBs and private producers weren't
sure if their bills would be paid. As a way out, the state and Central
governments started giving guarantees and counter-guarantees of payment
on behalf of SEB. But it took just one Enron to prove that short cuts
wouldn't work.
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COST
OF NON-PERFORMANCE
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Less
than 50% of power is metered; only 30% is paid for
SEBs lose Rs 14,913 cr annually; returns on investments is -19%
Indian industry pays thrice as much for power than the Chinese
do
COMMITMENTS
100% metering of power supply by 2002; create capacity to transmit
30,000 MW of power by 2002 and additional 1,00,000 mw by 2012.
Delicense generation completely, abolish CEA clearance.
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Now Prabhu's first task is to refocus reforms
both among and within the SEBs. In July, he brokered an agreement between
the states and the Central power producing units (for instance, National
Thermal Power Corporation) that took the entire Rs 41,000 crore unpaid
dues of SEBs off their balance sheet and converted them into bonds to
be serviced by the state governments. In one stroke, all liabilities of
SEBs were wiped out. To prevent SEBs from running up huge unpaid bills
states have also committed to pay for the electricity they buy every month,
failing which the arrears will be deducted from the defaulting state's
share of funds from the Centre. The Power Ministry has also signed agreements
with 16 states which make it obligatory to end free supply of power and
set up regulatory commissions.
The cause of SEB bankruptcy is transmission
and distribution (T&D) losses, also called theft and dacoity losses.
Most states lose up to 50 per cent of their generation in T&D. These
losses have mounted as more than 50 per cent of power supply in the country
is not metered. Prabhu has set a target for 100 per cent metered power
supply by December 2002. A programme is also underway to develop 60 districts
as models of excellence in power distribution. Though distribution is
a state subject, the Centre will fund the project along with other agencies.
With these and other schemes, he hopes to pull SEBs out of loss in three
years.
His next battle is transmission. A plan is on
the anvil to modernise transmission network. By 2012, the country should
also have the capacity to transmit 30,000 MW of power. But in his drive
for better T&D Prabhu claims he has not lost sight of generation.
By September this year, he promises to tie up the entire generation capacity
of 43,000 MW to be created during the 10th Five Year Plan (2002-7). That's
ambitious given the abysmal performance of the ministry in the past 10
years. The combined capacity creation during the 8th and the 9th Plans
is only 37,500 MW, against the target of 71,245 MW.
Prabhu's confidence in meeting the 10th Plan
target stems from one logic: once SEBs are out of the chronic sickness,
investment in power generation will become viable. Even without guarantees,
investment in power generation should flow in. He also proposes to delicense
investment in power generation completely. Even the techno-economic clearance
by CEA will be abolished. The new electricity bill should make generation
even more attractive because it proposes to allow producers to sell power
directly to consumers-without going through the SEBs-on payment of a surcharge.
First drafted in 2000 by infrastructure expert Gajendra Haldea, the bill
has been through eight drafts. But it is yet to be tabled in Parliament,
where it could take a year to get clearance.
Though critics have held Prabhu responsible
for sitting on the bill, his defence is clear: "It's not the bill,
but the political will that is the key to the success of reforms."
True. But politicians are still luring voters with promises of free power,
as was evident in the recent panchayat elections in Andhra Pradesh.
"Depending on whether they are in power
or in the opposition, parties support or oppose power reforms. This has
to end," says Prabhu. How? He has prepared a basic programme for
power reforms on which he will seek endorsement of the leaders of all
political parties. He will then seek the consent of major trade union
leaders. The outcome of this novel signature campaign can break or make
Prabhu's entire grand dream for power sector reforms.
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