At the very start, let me throw a few numbers at you, just don’t get confused by them. India has the fifth largest installed power capacity on the world (the first four are – US, Japan, China and Russia –in that order), and is one of the top power consumers. You think this is good enough? OK – let us have more numbers – India has an installed power capacity of approximately 150 MW (2009), which is 4% of the global capacity. The per capita power consumption (per year) in India is about 720 KWh (or units), which is less than 5% of the per capita consumption in USA, and less than 20% than that of China. The global per capita consumption of power is about 2,340 KWh (Units).
Indian Power Sector – A Brief Snapshot
If you consider the Indian power sector, a very bleak picture emerges. If there have been any achievements, they are definitely been very few and far between – and none of them worthy of any mention. There are schemes galore – but they have largely remained on papers, and no effect has been felt on the ground. If you live anywhere in India – you can definitely vouch for this. Just think – has the power situation improved or worsened where you live? I can easily guess your answer.
Let us consider a few chief highlights of the Indian power sector, as it currently is -
>> Current installed power generation capacity – 150,000 MW (approximately).
>> Domination of public sector enterprises – National Thermal Power Corporation(NTPC), National Hydroelectric Power Corporation (NHPC), Nuclear Power Corporation of India (NPCI) and Power Grid Corporation of India.
>> Of this, 75% is constituted by thermal power(coal based and gas based), 21% by hydro electricity power, 3.5% by nuclear power and less than 0.5% by wind and solar power.
>> More than 50% of the power generation in India is coal based.
>> Gap between peak electricity demand and production – 12%
>> Though 80% of rural areas have been connected to electricity, less than 45% of rural households have access to electricity.
>> Transmission and distribution losses – 35-45%.
A close look at the above figures reveals the bleakness of the Indian power sector. For example, let us start from the last point – transmission and distribution losses. Rajiv Gandhi had once remarked about 5 paise out of 1 rupee reaching the intended beneficiaries. The situation is somewhat similar in the power sector, where out of every 100 units produced, 33 are lost during transmission and distribution! Most of this is due to power theft.
The power generation in India is largely coal based – thus adding to the already heavy pollution.
The persistent gap in peak demand and supply levels of electricity has meant frequent power outages, even in the so called metropolitan cities – some of which pride themselves as global software hubs (I live in one such city).
Indian Power Sector – The Challenges
In typical fashion, the government has set up hugely ambitious targets for the past many years, and failed miserably every time. Consider this – during the past three 5-Year plans (8th, 9th and 10th), the target achievement rate in installing fresh power generation capacity has been less than 50% ! Yet still, every year a higher target is set. The top reasons for this massive slippage are –
- delays in technology procurements,
- delays in awards of works,
- delays in clearances and land acquisition,
- delays in financial closure,
- court cases,
- law and order problems, and
- lack of trained manpower.
Let us have a look at the current target. Till 2012, the installed capacity is planned to increase by 78,000 MW – a steep target, especially considering that the current installed capacity is only 150,000 MW. Now, what is the game plan to achieve this massive 50% boost, and that too in the next TWO years, is something that only the government of India can reveal.
Another crucial factor is the really huge finance that will be needed for this expansion – it is estimated that the targeted enhancement will need an investment of RS 7,50,000 crores (more than USD 150 billion). With fiscal deficit already approaching 10 % of GDP, it is anybody’s guess where this money will come from.
Urgent Overhaul Needed
The power demand in India is set to explode in the coming years. Various estimates suggest that if (a very big IF indeed) India wants to sustain a 8-9% GDP growth over the long term, it will need to have 4,00,000 MW of installed capacity by 2020! The situation becomes more daunting, almost impossible, if 2030 estimates are believed – at 9,50,000 MW! Please remember, the total installed capacity as of 2010 is 150,000 MW only!
Whether India will be able to achieve these figures or not, is really a moot question. But considering the current track record of our performance, you will definitely not like to place any bets!