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Wednesday, Aug. 8, 2012

EDITORIAL

The darkness in India

Twice in one week, Indians were forced to endure the worst blackouts in their nation's history. Two consecutive incidents, for reasons as yet undetermined, left hundreds of millions of people without power.

Whatever the specific causes, the failures are basic: Indian politicians refuse to fix a power system, which makes no economic sense. Too many people get power at prices that bear no relation to the cost of providing electricity.

Failure is unavoidable. The question now is whether the blackouts — affecting 10 percent of the global population and thus the worst in history — will trigger long-needed change. India's future could hang in the balance.

On July 30, 360 million people in seven states lost power; a second incident the very next day left 640 million people in northern and central India in the dark. Trains were stopped, traffic lights went dark, families lit candles. Many small and medium-size companies ground to a halt; major industries relied on backup power generators to keep functioning.

Many Indians were understandably outraged. The massive blackouts exposed the fragility of their country's economic infrastructure.

The Indian economy has been slowing — marking six percent growth most recently — and the dream of emerging as an economic superpower that would one day overtake China is slowly dissipating as the structural limits to growth become clear. There are many potential vulnerabilities, few as obvious however as its power sector.

India has installed power capacity of 205,000 megawatts (MW). While that is more than a third larger than it had five years ago, it is still only about a fifth of China's capacity.

And even with some 300 million Indians not hooked up to the power grid, there is a deficit in power supply at peak hours that is reckoned to reach about 10 percent.

Blackouts are a fact of daily life for many Indians. Experts estimated that transmission inefficiencies — blame old facilities that lack investment — and theft deprive the country of 15 to 40 percent of the power that is generated.

According to the World Bank, theft reduces India's gross domestic product by 1.5 percent.

But those economic realities reflect political decisions. Many of the inefficiencies are attributable to a political system that refuses to make customers pay the full cost of electricity use.

Electricity prices are heavily subsidized, with many farmers getting free power. Experts believe that much of that power is not for farmers, but is instead diverted to local factories. Prices that are set too low mean that power companies have no desire (or capital) to invest in modernizing their infrastructure. Failures are the inevitable result.

The Indian bureaucracy appears to stifle whatever impulses there might exist to modernize the grid. According to government figures, the average delay for construction of thermal power projects is 15 months.

Some plants take even longer; one set for Uttar Pradesh — one of the states hit by last week's blackouts — has languished for over a decade, stalled by protests by farmers and a legal challenge that is not yet resolved.

Even though the country has the world's fifth largest coal reserves, supplies of that fuel are limited. The blame is usually put on environmental regulations that prevent new mines from opening and a reluctance to invest that perpetuates an antiquated rail system that inhibits deliveries and prevents technological modernization in the mines themselves.

It is estimated that 10 percent of electric plants lack sufficient coal supplies.

But the biggest issue is the lack of political will in the central government. Delhi refuses to enforce limits on the amount of power state governments can draw from the national grid. Some insist that not regulating the draw is understandable, as a weak monsoon that did not provide enough water to irrigate farm land and a surge in demand were to be expected.

While convenient, that explanation ignores the larger political picture. Delhi is unlikely to enforce electricity quotas when it needs continued support from state governments to ensure the survival of the government of Prime Minister Manmohan Singh.

As one power official conceded in an interview, "We are powerless to enforce grid discipline like they do in developed countries of the world. There are political constraints."

Indicative of that lack of political will is the extraordinary response to the blackouts. When questioned about his response, Power Minister Sushilkumar Shinde rated himself an "excellent power minister" the day after the blackouts — as he was being promoted to interior minister, a plum post.

Mr. Shinde's last official act was to set up a commission of inquiry, which will have to determine what really happened last week and why.

The outcome of that investigation is important, but action probably should not wait until the bureaucratic wheels grind to a halt. India's long-term ambitions demand reliable and plentiful supplies of energy.

Today it has neither. The country deserves better.



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