murali772 - 19 July, 2009 | Bangalore | Corruption | Power | Privatization | Analysis | efficiency

The Raichur Ulisi Andolana Vedike has urged the Union Ministry of Environment and Forests not to give clearance for the proposed establishment of two additional thermal plants near Raichur contending that this would adversely affect people as well as the environment.

Following is the exchange on the subject that took place in Hasiru Usiru Y-group recently, pursuant to an opening post made by VB, the essence of which (extracted possibly from Frontline) is as reproduced above.

I retorted with
If a coal-based thermal power plant has to come up in Karnataka, Raichur district, which has many of them already, is the most suited. It is geographically closest to the AP, MP, Chattisgarh, Bihar coal belt; it has amongst the lowest population density compared to any other district; its agro-climatic conditions are not quite suited to any of the other forms of economic activities, including agriculture.

Whatever, whether in Raichur or verdant Dakshin Kannada, the fly-ash and such environmental issues need to be addressed.

The question as to whether coal-based thermal power plants are required at all, is another debate altogether - check this

 

MR responded with
Looks a solution from the wrong side. The real problem is consumption - people are not mending their ways. Govt is coming up with pathetic solutions -
http://ecobcil.com/content/sunshine-solutions. I think no matter how many plants are built unless people bring down their consumption with a conscious effort it won't help!

 

I came back with
Very true - as also proper demand side management, which can happen largely through proper management of distribution, involving professional private players, again very much as spelt out in the reforms agenda. For more, click here


RN came in with
I do not understand how privatisation of large-scale public services is the solution to the question of high consumption. The argument does not hold steam if we dig a little
deeper. Privatisation by its very definition means competition, means efficiency, means profits at any cost. All of this naturally implies cost-cutting where it hurts the least, it means short-changing the environment, short-changing the voiceless (who dont show up to public meetings in the first place, since invites are sent via email), and short-changing future generations. All of this makes no dent on reducing consumption from those who consume the most (industries, urban firms, households), and only makes access more difficult for those who are already lacking in access to power.

This is basic market efficiency economics. And the idea of trickle-down doesnt work. 'Help the rich, and then the poor will benefit eventually' is not ok. If middle class urban
folks get more power 2 years from now, it does not automatically mean that non-urban people (and urban poor) will get it. Why do some have to wait for years, and even when provisioning happens, then they end up paying more than is manageable.

And finally, you know what will happen? The government will subsidise power being provided by private companies to the rural areas. The government will buy power at a high cost from the private sector, and take the cost of subsidising it for the poor. From which framework of development does this make sense?? This is supposed to be a equitable citizenry for heaven's sake!

Although I dont want to get deeper into the pro-public sector argument in this thread, I will say that if we are unhappy with the government, please step out and work towards
governance and administrative reforms. The strongest governments are the ones which actually allow for the most 'well-serviced' citizenry. Look at Scandinavia.

To end on a more philosophical note, in life, I feel, sometimes its good to feel the pinch. Unless we know what it means to be without power, we will rarely develop the capacity to conserve and reduce consumption. Simply go to a non-urban setting and observe the conservation and reuse that occurs in all aspects of life, and compare it to your own households. The contrasts will stare in our faces.

 

RS added
Unfortunately, all private players want exponential growing returns.

So demand side efforts can only bring in so much. Which is why DSM has failed. Yes a few success but after the low-hanging fruits are plucked it is more attractive to shift to another tree than to continue with existing ones (better returns).

And distribution is also not as attractive in terms of continuous growth. Whichi is why over time, distribution models move into content (data, water, ...)

As long as we have a system of exponential growth, reducing and managing resources is hard, if not impossible.


KN further added
It's not proper distribution on the consumption side that's needed, but better utilization of available power, especially by making all the appliances more efficient. Recently,
in Texas (USA), the energy utility company, instead of building a new 735MW power generation plant, cut down the demand by that much by forcing all the appliance manufacturers (especially AC, refrigerators and such high-end appliances) to improve their efficiency. That's what is needed here too.

 

I responded with
It's all wonderful to talk of conservation - I too do. I have replaced all incandescent lamps in my house with CFL's; I don't have an AC in my house, and will never have; I keep my bathroom geyser permanently switched off, except in the months of December and January; I have set up a monthly energy consumption recording and display system for the apartment complex, where I stay, in order to monitor and keep a check on the overall consumption; and more.

But, how many of the many of us who indulge in this talk are not dependent on one form or the other of back up, and can manage beyond say a 24 hrs without power supply?

Bangalore, where the power supply is totally in the hands of government-owned BESCOM, the customer satisfaction level can be pegged at around 3 on a scale of 10, as compared to Mumbai, where it is the TATA’s and Reliance who are distributing power and the customer satisfaction level could be pegged at close to 9.5 (on the same scale of 10). As a result, there is a thriving Rs 1,500 cr genset, inverter, converter, battery, UPS, candle, match-stick industry in Bangalore, all in the private sector, while the same has a marginal presence, if at all, in Mumbai. So, the incompetencies of the government agencies involved, is promoting new opportunities for the private industry, and in the process, leading to less productive use of our scarce resources. That's what it is resulting in.

Back in the 70's, when the then Chief Minister of UP found that investment was not crossing the Jamuna into NOIDA inspite of many types of incentives, he decided to hand over the power distribution in the newly developed Greater NOIDA to the Goenka's. In a span of some 15 months, the Goenka's brought down the distribution losses from the average 50% prevailing in UP to a sigle digit level, in effect making available an additional 80 MW power (out of thge installed capacity of 200 MW) without a sigle paisa investment in capacity addition. Resulting out of that, Greater NOIDA is a thriving industrial hub today, whereas in neighbouring Ghaziabad (also in UP, but with power being supplied by UPSEB), things are in reverse gear.

Bangalore is possibly a 2000 MW load. A 15% reduction in the so-called T&D losses (nothing but theft & dacoity) can similarly unlock a capacity of 300 MW, equivalent of Rs 1500 cr capacity addition, and the burning of millions of tonnes of coal in a year.

There's no denying conservation measures are very much required. But, couched in the comfort of genset backed power supply, you cannot condemn the aam aadmi to the vagaries of the BESCOM supply.

 

SY came in with
Brilliant. Thanks.

 

DKP came in with
One small thing - the T&D losses (theft and dacoity) reflect actual demand. I've seen people in some localities pull wires directly from the electricity poles. I'm guessing this is what is referred as theft and dacoity. Well, even if a private player comes in and eliminates these losses, the affected people will need electricity and will, I assume,
become customers of the private utility. So demand stays same - 2000 MW. Please correct me if I'm wrong.

 

DKP further added
BEST which supplies power to Mumbai seems to be an undertaking of the Brihan Mumbai Mahanagarpalika.  It only BUYS power from Tata Electric Company.  So power supply & distribution is not private I believe.  Part of the power generation is private (TEC supplies majority of it, rest from MSEB).

As always, open to being corrected.


I responded with
Power shortage in summer months is universal. That's a problem related to generation capacity. And, it's because of this shortage, and increasing demand, that you need additional power generation..

In generation, there's not much to choose between public and private companies - both are equally good. NTPC (public sector) has by far the biggest capacity, and does a fair job technically. But, where it is handicapped is in getting its money from the distribution companies, most of which are government-owned, and also dead broke. BEST, about which you had written, ran up deficits of Rs 221 cr in power supply, and Rs 372 cr in bus services, in '08 (It manages with Maharashtra government grants). Likewise with other distribution companies, most of which are far worse than BEST. Our own KPTCL, any given day, owes the equivalent of 11 months billing to the generation company, KPCL.

Private generation companies generally have direct tie ups with large consumers (eg. Graphite India), and consequently are able to manage their cash flow better, and therefore purchases of their inputs (coal/ oil) and services (transport) much cheaper, resulting in higher overall profitability.

The problem clearly is in distribution, with each of the many government companies (including BEST) being absolutely broke, and in addition causing serious problems to the entire industry both up and down-stream, but much to the delight of the gen-set, converter/ inverter, battery manufacturers.

The answer plainly is privatisation of distribution, which even the government of Karnataka, amongst others, have accepted in principle long back. But, the vested interests, starting with the Director (Reforms - ironically), KPTCL, are thwarting it using some pretext or the other. For more on this, click here

PS:
1) BEST (both in bus services, as well as in power supply), inspite of its losses, is considered a fairly efficient service provider. As we have been discussing in PRAJA, it
also has something to do with the Mumbai work ethos. But, when faced with such massive losses, year after year, it's impossible to keep up the tempo.

2) Delhi's privatised distribution companies have now more or less come to grips with the sabotage efforts of the erstwhile unionists and other vested interest groups, and
efficiency levels should match Mumbai in a few years' time.  


DKP came back with
We are shifting goal posts here.  We were talking of customer satisfaction and now suddenly we have shifted to money matters.

Power generation is a problem , there is no doubt about it. Even if demand is reduced by consumers reducing usage and being more power-efficient, we need to generate more power in our country. That is a given.

I was referring more to this statement "Bangalore, where the power supply is totally in the hands of government-owned BESCOM, the customer satisfaction level can be pegged at around 3 on a scale of 10, as compared to Mumbai, where it is the TATA’s and Reliance who are distributing power and the customer satisfaction level could be pegged at close to 9.5 (on the same scale of 10)".

We are using Mumbai as an example.  Distribution in Mumbai is being done by BEST which is a public utility. If the problem is mainly in distribution and we can see that a public utility is able to do it extremely well as you yourself state above, we can't say 'we need to privatise distribution to improve aam aadmi's lot'. If work ethos is the problem in BESCOM, then we need to address that.  Or else we need to say, 'let us find out where the work ethos is not good in the country and privatise only there'.

As for dues owed to the power vendors, I think it is a price to pay for low rates. So, the government picks up the tab. Fine. At least the 'aam aadmi' along with not-so-aam
aadmi's are getting power at affordable rates. Private companies get away with hidden subsidies too, I'm sure.


I responded with
The distribution in South Mumbai is in the hands of BEST, whereas in Central and North Mumbai it is with Reliance. The tariffs are common, fixed by MSERC. The customer satisfaction levels with both are fairly high (need to re-confirm about BEST). But, one makes huge losses, year after year; the other makes fair profits, year after year.

The Maharashtra government cannot sustain the subsidy regime for long, and is clearly under pressure to privatise the distribution in South Mumbai also, particularly when there is a ready example is available just next door.

Well, apart from Mumbai, the cities/ areas that 'enjoy' power supply from private companies are Ahmedabad, Surat, Kolkata, Greater Noida, and in all these places, the customer satisfaction and profitability levels are far higher than elsewhere where the supplies are with government companies/ agencies, all being subject to uniform regulation by the respective SERC's.

So, it should be clear to anyone who wants to see as to where to take the goal-posts and plant them. Those who instead want to improve the work ethos of the BESCOM lot, can work at it till kingdom come.   
 

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