Performance Check On Power Sector On Two Year’s Of Modi Govt.

Performance Check On Power Sector On Two Year’s Of Modi Govt.

Anupama Airy

As the Narendra Modi’s government completes two years in office on May 26, 2016, its time to analyze the performance of his lieutenants in the Cabinet. We begin with the performance review of the minister of state for of India’s power, coal and renewable energy, Piyush Goyal.

Usually, a review of India’s power and coal sector has always been the easiest task for anyone but it will not be an exaggeration to say that reviewing the same sector under a minister, who has tirelessly worked day and night over the past two years to bring about a long pending change, is not going to be an easy task.

2 Yrs of Modi Govt And Reforms In Power Sector
·         The Financial Restructuring Scheme For DISCOMs—UDAY (or Ujwal DISCOM Assurance Yojana) one of the most comprehensive power sector reform ever to turnaround the ailing state distribution companies
·         This was achieved through efficiency improvements, UDAY bonds worth Rs 1 lakh crore issued in 2015-16
·         Landmark amendments in the Tariff Policy to promote electricity for all, efficiency to ensure affordable tariffs, environment for a sustainable future and the ease of doing business to attract investments
·         Signing of State Specific Action Plans for 24×7 Power For All states and union territories (already signed with 19 states and union territories)
·         Rationalised movement of 23 million tonnes of coal, a move that led to potential savings of Rs 1,371 crore

With a series of path-breaking initiatives in all the three sectors, Goyal has undoubtedly scored over this contemporaries and has emerged as one of the few ministers of the Modi government, who indeed has had a power-packed innings in these two years.

The first palpable change that Goyal has brought about is the change in perception, at a time when millions of Indians had given up the idea of having adequate power supply and most industries had switched to high cost diesel generated power as uneven power supply was affecting their businesses. For the first time in independent India ‘power for all’ looks like a soon to be reality.

Finally, the country looks poised to become a “genset and invertor free” nation with 24×7 power supply. The performance and pace of reforms in the power and coal sectors have also been noticed by international rating agencies such as Standard &Poor as also funding majors like the World Bank, ADB, IFC –who had time and again cited lack of reforms in these sectors as one of the major bottlenecks in India’s growth story.

“We have a long journey ahead of us. I do hope that in these two years, we have been able to create a structural frame work where people have hope and confidence that things can be done honestly, things can be done with a great degree of participation and cooperation amongest difference sections of all the stakeholders,” Goyal told the EnergyInfraPost when asked on his journey over the past two years.

“I am also finding that the confidence has come back for fresh investments in this sector…Look at the progress of power transmission in South India where a lot of stalled projects have also been revived. As a result of this, power prices for the southern region– Tamil Nadu, Kerala, Telangana, Andhra Pradesh have fallen by nearly 60 or 70 % in less than 2 years,” he added.

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And Goyal is not boasting. Transmission capacity in India has been inadequate and unevenly distributed, leading to constraints in supplying power from surplus States to deficit States. As part of the goal of ‘One nation, one grid, one frequency’ the Available Transfer Capacity (ATC) of South India (Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Telangana and Puducherry) has been increased by 71% to 5,900 MW from 3,450 MW in 2013-14.

“Transmission has gone up remarkably by 71% in only 18 months and most of the southern region today is power surplus– from an era when they used to buy power at as high as Rs 16-Rs 18 a unit to reaching a point when they do not have to pay more than Rs 4-5 now….Usually, power is available under Rs 3 and with the launch of Vidyut Pravah, I am sure the people of India will be benefitted with more power in their hands… or literally in their mobile phones,” Goyal said.

In 2014, when Goyal took over as the power minister, there were 30 crore people without access to electricity in India. It was a matter of distress that even after 67 years of India’s independence affordable 24×7 power for all was still a dream. This was compounded by the fact that one of the largest power outages in our history happened in July 2012, throwing 62 crore people into darkness, even as more than 24,000 MW of generation capacity lay idle due to the lack of fuel like coal and gas. As many as two-thirds of coal-based power plants (tracked by Central Electricity Authority) had critical coal stocks meaning less than 7 days supply of coal.

As Goyal took charge in 2014, he accepted the challenge of turning around a sector that was symbolic of the impact of decades of inefficient bureaucracy coupled with visionless policies. Since independence, electricity was used for political gains, while free power was needed to charge up the agricultural sector, there was also a pressing need to boost electricity generation to fire up industrialization and the rest of the vast population of poor country needed to light their homes at affordable rates. Soon, the concept of unnaturally low power tariffs, maintained through subsidies became the norm. Power theft was rampant and the government turned a blind eye mounting unpaid bills. State run distribution companies started running into huge losses and before long began the spiral downward journey of a sector that was largely government-controlled.

Areas like energy efficiency have never been so popular in India. Today, India is running the world’s largest energy efficiency programme and on a recent visit to the UA and UK, the two nations actually took energy efficiency lessons from India as the ongoing programs on energy efficiency back home have seen massive energy savings as also benefitting consumers by cutting down there electricity bills.

In just one year, the distribution of energy efficient bulbs has crossed 10 crore by government agencies and 6 crore by private entities under UJALA or Unnat Jyoti by Affordable LEDs for All.

One of Goyal’s biggest achievement has been the introduction of UDAY or Ujwal DISCOM Assurance Yojana to light up the power sector. UDAY is an answer to pull the state distribution companies out of their financial and operational inefficiencies.

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As many as 10 states have already signed the UDAY agreement while 8 states and 1 union territory have agreed in principle. UDAY Bonds worth about Rs. 1 lakh crore have been issued in the last year alone showing the viability of this programme. The scheme focuses on improving financial and operational performance of DISCOMs to make them profitable by 2018-19. It is an excellent example of co-operative and competitive federalism in India.

In fact Goyal has been openly saying that India does not need tariff hikes and it is all about managing it right.

Elaborating on this, the minister said,Personally, I think efficiency gains in terms of UDAY — where we are talking about Rs 1,80,000 crore savings per year that all the states which join into UDAY can enjoy. My sense is that when all states come on board, which I am quiet sure of. All these gains will be enough to take care of the existing requirements of the DISCOMs. I think we will have to perk up our acts, we will have to be efficient across states and the political pressure of people demanding better quality service and affordable power will make sure that (hopefully) we don’t have to increase tariffs. Unless in some stray cases where efficiency gains are not as much as we desire them to be.”

Goyal’s other focus area has been renewable energy: From just 3000 odd mw solar power generation since independence, he set an ambitious target of setting up 1,00,000 mw (or 100 GW) of solar capacity within 5 years and by 2019.

As proof of his government’s commitment, with a year and in 2015-16, the largest ever wind capacity addition of 3,300 MW was achieved. There has been a 157% increase in solar capacity since 2014 of 4,132 MW. Solar projects of capacity 20,904 MW were tendered in 2015-16 of which, projects of 11,209 MW have already been awarded. 32 Solar Parks of 19,400 MW capacity have been sanctioned in 20 states.

Then a Rs 38,000 crore Green Energy Corridor is also being set up to evacuate renewable energy. Commensurate with the goal of becoming the Green Energy Capital of the world, India took a lead in formation of the International Solar Alliance of 121 countries to promote and develop solar energy. This will be the first major international organisation to be headquartered in India.

Coal is the mainstay of India’s energy needs. The crisis arising from the cancellation of 204 coal blocks by the Supreme Court was answered with a fair and transparent auction and allocation process which, is estimated to bring in potential revenue for coal bearing States of about Rs 3.44 lakh crore over the lifetime of 74 mines. The last two years have seen a massive jump in coal production by 7.4 crore tonnes in 2014-16 matching the incremental production during the 11th plan period.

Today, not a single power plant in the country faces critical coal stock level with more than 25 days average stock (as on 26th April 2016) at power plants – a far cry from the hand-to-mouth days. Increased domestic production of coal has reduced the import bill by more than Rs. 28,000 crore.

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Electricity generation has also picked up, almost matching demand. Energy deficit during the current year has been reduced to its lowest level ever of 2.1% from 11.1% in 2008-09. Similarly, peak shortage has been reduced from 11.9% in 2008-09 to 3.2%, again, the lowest ever. Thermal electricity generation grew at 7.4% in 2015-16 with a strong performance in March of 15.9% y-o-y. To sustain this growth the highest ever capacity addition of 46,738 MW in conventional power has been attained in 2014-16, accounting for around a fifth of our current conventional capacity.

Mahatma Gandhi said ‘The future of India lies in its villages’. A massive drive is already underway to electrify all the 18,452 remaining un-electrified villages by 2019. Hon’ble PM Shri Narendra Modi ji gave a target of 1,000 days but given last year’s performance, there is a distinct possibility of reaching that target much before. In just one year, 7,108 villages have been electrified against the initial target of 2,800 under the Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY). The impact of this electrification on socio-economic uplift of these villages will be manifold.

The agriculture sector has also been assisted and 31,472 solar pumps have been installed in one year, which is higher than the total number of pumps installed since the beginning of the programme 24 years ago in 1991. Energy efficient agricultural pumps have also been launched.

Transparency and accountability is the foundation of this Government. In this regard proactive steps are being taken to ensure citizen involvement in the power story through information sharing and feedback collection on websites and mobile apps. These apps are also assisting the Government in matching its own performance against targets. Grameen Vidyutikaran (GARV) app helps the citizen track progress of rural electrification. The UJALA app shows real-time LED distribution numbers across the country. VidyutPRAVAH app provides real time information of electricity price and availability thereby, giving in the hands of the people, the tool to hold their state governments accountable.

“All the above extraordinary results have been made possible by the joint efforts of Team India and the unprecedented stress on transparency and accountability in governance. With our Government’s initiatives and the support of 125 crore Indians we will soon be successful in illuminating the life of every Indian thus creating an Ujwal Bharat,” said Piyush Goyal.