Rural India: tripped by shortages

 Rural India: Tripped by shortages

S. K. N. Nair

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The rural electrification programme will take the wires to the villages, but energy flows will remain meagre. Power supply to the villages will not improve until overall shortages are eliminated. And, given the scale of shortage, even the 'fastest' route will stretch beyond the short term, says S. K. N. NAIR.

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This hut-dweller is the beneficiary of a rural electrification scheme, but for most of rural India, the wait for a power connection is endless.

"Provide urban amenities in rural areas"— this was the former President, Mr A. P. J. Abdul Kalam's challenging vision for rural India. Road connectivity and electricity to all of the country's six lakh villages denote the starting point for turning Mr Kalam's vision into reality.

Two large national programmes are currently underway — the Prime Minister's Rural Roads Programme (Pradhan Mantri Gram Sadak Yojana) and the Rural Electrification Programme (Grameen Vidyutikaran Yojana) named after Rajiv Gandhi. Also, the current Plan for the power sector is structured around the aim of "Electricity for all by 2012".

The money invested in the roads programme could make an immediate impact on rural lives, but the case of electricity is complex. The scepticism springs from three factors.

Shocking trends

First, power shortages are worsening, hardly an encouraging sign for a country aiming to take electricity within reach of over 80 million more households (40 per cent of total) within the next four years. The all-India energy and 'peak power' shortages increased by a percentage point each in April-May this year compared to the corresponding period in 2007.

Second, the capacity-addition programme, already behind by about two years as of March 2007, is trailing the targets in the current Eleventh Plan as well. On latest indications, just around 25 per cent of the meticulously calculated five-year target of 78,577 MW will be added in the first two years of the Plan . Barring a miracle, electricity shortages will, therefore, continue beyond 2012. Compounding these two negatives is the positive trend of rising urban incomes. Why this should impact rural electricity adversely will need some elaboration, but first a look at the current status of village electrification.

Village electrification

About 105,000 villages of the total 593,732 (17.8 per cent) remained to be electrified as of March 2008. The Rural Electrification Corporation, a central undertaking, is co-ordinating the Grameen Vidyutikaran Yojana and as most target-driven, adequately-funded programmes gain added momentum nearing the deadline, the remaining gap can be substantially bridged by 2012.

However, connecting villages to the grid is quite distinct from actually delivering electricity to the rural population. For this, average hours of supply to villages already connected provide a reliable index. Sample data collected for a study on rural infrastructure by the National Council of Applied Economic Research in 2001 — a period when electricity shortages were at much the same levels as now — placed the average electricity 'outages' across states in rural areas round the year at almost 14 hours per day.

Bad enough as they are, such average numbers conceal the highly undependable and erratic nature of the supply which discourages rural households, short on purchasing power, from taking power connections.

Barring a few States that are better off electricity-wise (Chhattisgarh, Himachal Pradesh, Uttarakhand) conditions remain much the same today in most others. Maharashtra, now under severe power shortage, provides an illustration. The 'load shedding schedule' in force provides for daily power cuts of 10-12 hous in agriculture-dominated regions compared to three to six-and-a-half hours in other regions. In better-off States, rural areas suffer other forms of neglect. Tamil Nadu, normally free from power cuts, is carrying waiting lists of more than four lakh applications for rural power connections, some pending for over 20 years.

CII-Pune Model

Rural electricity supply will not improve until overall shortages are eliminated. The growing affluence in select urban centres is a factor to be considered. In a deficient supply environment, there is demonstrated willingness on the part of urban consumers to bear additional charges if they are provided with 'round the clock' supply.

The entry of competitive forces into the sector and the electricity trading facility now in place make this increasingly feasible.

Not surprisingly, Maharashtra set the trend three years ago with the so-called "CII-Pune model" that insulated consumers in that city from 'load-shedding' by using industrial captive power to support the grid when needed. In addition to the normal tariff applicable, consumers benefiting from the arrangement bear a 'reliability charge' at a rate set by the regulator.

In a significant recent change occasioned by rising demand that made the captive power support inadequate, the regulator has now authorised procuring of 100 MW (twice the quantum that captive power offered) for 12 hours daily from a private generating company in Maharashtra itself. This arrangement will continue till May 2009 ensuring that Pune remains free of 'load-shedding'.

Paying more for assured supply

Three more circles in Maharashtra have followed suit. To ensure 'zero load-shedding', Thane and Vashi (the latter covering the Navi Mumbai area) will purchase additional power of 175 MW through an 'electricity trader' by import from outside the State. The third case is of Baramati town which will adopt the original Pune model, of saving consumers from 'load-shedding' by drawing on industrial captive power. In all these cases, the 'reliability charge' would increase the average domestic tariff by around 10 per cent which the consumers find affordable. (Low-end domestic consumers are exempted from the charge).

Gurgaon, Haryana is likely to be the next to join this league and several other cities will be sure to follow. Consumers' paying more for assured supply fits in with economic theory. The market signals will steadily encourage new investments in capacity until equilibrium is reached. Judging by the flurry of activity in promoting new private power plants, this seems to be happening already.

The point is this: The gap between supply and demand is too wide and the gestation period of new projects is too long, so in the interim period till capacity draws level with demand, the additional power drawn will mean that much less supply to some other category.

About 10,700 MW of the Eleventh Plan target capacity-addition (14 per cent of total) is to come from the private sector, several of them wholly of the 'merchant power' variety or plants that earmark a share of their capacity for lucrative 'trading' purposes. An increasing proportion of the added capacity will thus be siphoned off by cities seeking uninterrupted supply.

Chances, therefore, are that the village electrification programme will take the wires to the villages, but energy flows will remain meagre. This makes it a matter of utmost urgency for rural households that overall electricity shortages are overcome fastest. But, given the scale of shortages to be overcome, even the 'fastest' route will stretch beyond the short term.

This urgency got hardly any notice in the controversy and debate over the Indo-US nuclear cooperation agreement with which the issue has a linkage. In "Reflections on the power mix", Business Line, July 19), this writer had argued that in order to bridge the demand-supply gap in a reasonable time-frame, the shelf of projects under execution needed to be significantly enlarged and further that increased nuclear power would fit into this scheme.

This was because coal-based plants, the mainstay for base-load power supply, were particularly prone to delays in implementation and nuclear plants could provide the needed additional volumes.

Shut out the nuclear option and the base-load supply would need to come almost wholly from coal. With all the problems in the coal sector (and port congestion if coal imports are to be increased substantially) this would mean that the shortage regime will prolong. So will Rural India's wait for reliable electricity supply.

"Electricity for all by 2012" is no longer a realistic aim. For reaching electricity to rural homes, the hard choice now is between the medium term and the long term. As the country's nuclear isolation could be ending soon, an opportunity opens up to ensure that the better option prevails.

(The author is a former Member of the Central Electricity Authority and a former Consultant to the National Council of Applied Economic Research, New Delhi.)

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Gopinath S
Bangalore
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