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Three Years Of Modi Govt: Power Sector Report Card

As Modi government draws to its three years completion, it’s time to take stock of the hits and misses of the sector

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It was the doomsday of 30 July 2012, that was the blackest day in the history of the India power sector, where the country faced the largest power outage, leaving 62 crore people in darkness. We have come a long way since, overcoming major policy paralysis and the vicious cycle of inaction. Today India ranks 26 in the World Bank’s electricity accessibility ranking, making a major leap from the 99th spot in 2014. How did this turnaround happen? More importantly, we analyse how the man at the helm, Piyush Goyal managed to make the country jump these 73 spots!

As Modi government draws to its three years completion, it’s time to take stock of the hits and misses of the sector. The biggest hit of this sector is the fact that India, for the first time in the history, became a power surplus country. India’s total power capacity increased from 243 GW in march 2014 to 320 GW in mar 2017, a notable growth of 31 per cent.

It’s a sheer non-nonsense approach of this government that is commendable. The biggest hit of this government according to the former Power Secretary Anil Razdan is how this government managed to create a synergy between the different power related ministries- Power, Coal and New Renewables and make them work in tandem with each other and not in silos.

“The earlier government also came out with successful power reforms and schemes but in comparison, this government’s resolve has been good with the most positive factor being its proactive minister with a bold view. But its is not about just taking decisions, they need a fierce implementation, which is to some extent taken by this government”, says Razdan.

Coal Redemption

The headline of every news report spelled the agony of coal business in India when this government took charge. In October 2014, at least 56 thermal power stations were reporting critical coal stock levels of or less than seven days. The government has worked to solve the issue of coal block allocations and creating coal linkages to support long-term fuel availability. Today our coal-based power capacity has increased by 26 per cent from 214 GW in Mar 2014 to 270 GW in Mar 2017.

“Coal India has seen a major turnaround. What they did right was to move more towards a customer oriented approach to mining and treat it as a commercial profession”, says Razdan. However, he expresses that today the situation is as such that the demand has not been able to keep pace with the generation, where take off could be problematic. The government needs to deal with that, going forward, on priority.

DISCOMS - Taking the bulls by its horns
Three years back, when this government took over charge, one of the major challenge facing them was the looming debt of the inefficient DISCOMS, who were struggling with payment defaults and ever rising ATC losses. The government had two option, either to come pout with another bailout scheme by restructuring loans and the second, to take the bull by its horns. They opted the latter and they did well.

Unlike the earlier restructuring schemes, tried and tested by the UPA government, UDAY for the first time made states accountable for their deeds. Its a clear ‘Perform and Perish’ theory. Amit Kumar, Partner, PwC, terms this as the biggest hit of the government.

“The scheme is well defined and structured, where both the issues of distribution companies’ health and the banks NPA are addressed. Now the onus is on the state regarding the tariff, which cannot taper with it too much, as they are accountable for their losses”.

One of the biggest electoral campaigns of this government was ‘24x7 Power to all’, which the government substituted with various reforms and schemes. In its three years tenure, they launched one of the biggest schemes called Deendayal Upadhyay Gram Jyoti Yojana focusing on rural electrification infrastructure. The number of un-electrified villages in 2014 stood at 18,452 which stands at 4,039.

“The present government has done a commendable work in reaching electricity to villages, hutments, talukas through their schemes in a time bound manner”, says RP Singh, Former Chairman Powergrid Corporation of India. Transparency is another major hit, with apps like GARV and Vidyut Pravah, which have brought in real time monitoring of the power data, which Razdan says will help in future to pull out the ones who fudge the information.

Clean energy priority
When a developing country invests so heavily on clean energy, it means serious business, as the cost of investing in clean energy is higher than conventional one.

“Few years back, nobody was ready to invest in renewables. Within the last 3-4 years, we have seen a tremendous upswing. And clarity in terms of policy for this sector got the right amount of confidence, which is a big hit”. according to Amit.

We have set ourselves a target of 175 GW, which according to some experts is too ambitious and would not be achieved. However, other experts term this as a hard hitting target and refer it to as famously said, ‘If you aim for the sky, at least you will fall on the stars’. But the other aspect of this is, that in a bid to make the non-conventional energy affordable, we have not yet fuelled in domestic manufacturing capability in solar.

“Bidding is a big miss. Nobody is admitting. The government is fixated on lower prices, where we are not hedging our future risks and compromising on the quality”, says Amit. The renewable capacity needs to move in tandem with storage, Grid integration, evacuation, storage and forecasting, which is a weak link at the moment.

Power Speed breakers
Though the power sector in comparison grew at a notable pace, there remain speed breakers. According to Singh, the UMPP(Ultra Mega Power Projects) launched with much fanfare could not occupy the much-trusted position in the sector which they were supposed to do.

“These mega projects could not get the desired push from the concerned agencies including the investors. Likewise, the 50,000 MW hydro initiative remains a non-starter but a few for private sector”. He opinionated that if power sector has to grow, transmission and distribution also needs to be given the greater push.