Of all the infrastructure areas, the United Progressive Alliance government has fared worst in power. While the UPA’s ultra mega power projects (UMPPs) programme promises to deliver increased capacity, much of the good news in power is only in generation and not in transmission and distribution (T&D). Where generating companies (gencos) have captive consumers who are willing to pay, the T&D problem is managed reasonably well. However, with few state electricity boards (SEBs) ready to make all consumers pay, and with populist politics denying consumers who are willing to pay the opportunity to do so and get access to assured power, the T&D gap remains acute. While the entry of private players in generation has proceeded without resistance, SEBs are reluctant to permit the liberalisation of the lucrative and politically-sensitive T&D segment. Thus, though allowing private participation in the generation, transmission (transco) and distribution (discom) segments was permitted in the Electricity Act, political realities on the ground have rendered its implementation difficult. In addition, the T&D segment faces several unresolved issues such as open access, connectivity issues pertaining to long- and medium-term access, transmission pricing and T&D losses. T&D losses (more often just theft) continue to plague sector performance with no remedy in sight. Losses conservatively estimated at 35 per cent (the corresponding figure for Korea is 4 per cent) reflect poorly on the administrative and regulatory will required to curb this malady.
It is arguable that private sector interest in T&D would not increase significantly, even if SEBs were to shed their resistance to their entry as long as these daunting problems persist. The scenario is, however, not entirely bleak. T&D is now seen as an integral part of the system rather than merely a post-generation process to evacuate power. The Accelerated Power Development and Reforms Programme (APDRP) initiated in 2001, aims at strengthening the sub-transmission and distribution networks and reducing T&D losses. Perhaps most heartening is the tremendous enthusiasm of private sector equipment manufacturers, encouraged no doubt by robust growth prospects of the India’s power sector over the next two decades and beyond. Both public and private sector players have joined the fray: Bharat Heavy Electricals Limited (BHEL), Siemens, Crompton & Greaves, Areva T&D, among others, have been ramping up domestic manufacturing capacity over the past two years. Even Chinese firms have been knocking at India’s door so that they are not left out of a growing market.
The most daunting challenge before Indian planners is to make the electrification programme more inclusive. This means extending the transmission network to rural India which has been largely excluded to date from developments in the power sector over the past decade. Even commendable programmes such as APDRP have a strong urban bias, being primarily concerned with improving efficiency in urban distribution through massive investments in the network, and a genco bias. The rural electrification programme needs to be accelerated not merely for reasons of equity, but because rising rural incomes have spurred demand. A virtuous cycle of economic growth backed by reliable power supply, meaning more efficient transcos and discoms, is urgently needed.
