x Abu Dhabi, UAEFriday 28 July 2017

Power struggles at top cause loss of power on the grid

Last week's power blackouts in India were rooted in politicised control of the grid and artifically low prices for electricity. Reform will be difficult.

As India emerged from the heart of darkness last week, the return of the light was accompanied by the sight of several chief ministers from several political parties pointing fingers at each other for triggering the world's largest blackout that had affected as many as 600 million people.

Delhi accused Punjab, Haryana and Uttar Pradesh of overdrawing power from the northern grid, thereby setting off the domino-like scenario in the northern, eastern and north-eastern grids. But both Punjab (run by the opposition Shiromani Akali Dal and Bharatiya Janata Party) and Uttar Pradesh (run by the Samajwadi Party) denied the charge. Instead, they openly blamed Haryana - like Delhi, ruled by the Congress Party - for wilfully flouting grid discipline.

Bihar - ruled by the opposition Janata Dal (United) party - advised the government to create a system so that no state could draw power beyond its prescribed limit. The BJP-run Madhya Pradesh grumbled that it could not sell excess power because of the blackout, thereby losing millions of dollars.

If the widespread power failure finally leads to much needed reforms in the power sector, the pain might be worth it. But that still seems a long way off. Over the weekend, as flash floods hit parts of Uttar Pradesh, the state again overdrew some 600 megawatts from the northern grid.

Much has been written about the need for states to control their greed for subsidised power and about line losses - the illegal connections, fraud and distribution inefficiencies that range between 30 per cent to 40 per cent of the 234 gigawatts India has the capacity to generate annually.

But one of the major reasons why power indiscipline remains rampant is because states routinely ignore the electricity regulatory body's strict code on the withdrawal of power. As several states in northern India are run by political parties in opposition to the Congress-led coalition at the centre, defaulting states are beginning to increasingly thumb their nose at grid code regulations.

Several of these political parties have come to power having promised cheap or free electricity, to farmers, for example in Punjab. In drought conditions like those felt this year, when river flows ran lower than usual, states prefer to violate grid discipline rather than buy power from other states at market rates.

Often, the governing coalition is loath to punish a political party because it contributes valuable support, such as the Samajwadi Party in Uttar Pradesh. The Congress party is keenly aware that Samajwadi bailed out its coalition government in 2008 when left-wing parties precipitated a political crisis over the Indo-US nuclear deal imbroglio.

In fact, Samajwadi and the Congress were bitter rivals during the Uttar Pradesh elections in February, but at the present moment a certain fondness for it courses through the Congress body politic. This is because the Samajwadi party's 22 members of parliament could come in handy just in case the maverick Mamata Banerjee, chief minister of West Bengal and Trinamool Congress leader, withdraws from the Congress-led coalition with her 19 MPs.

With 200 million people and 80 seats in the Lok Sabha, India's lower house, Uttar Pradesh has always been the nation's political marrow. Now researchers in the University of California, Los Angeles and the University of Michigan have found that power theft in Uttar Pradesh spikes during an election, due to unmetered use by farmers.

Still, the peak electricity deficit of 12 per cent nationally goes beyond Uttar Pradesh or Punjab. With states wantonly overdrawing electricity, last week's blackout was a terrible blow to a country that was beginning to count itself as a regional power.

But India's falling growth indices (at 5.8 per cent today compared to double digit figures two years ago) are now revealing a dismal lack of infrastructure exacerbated by massive financial scandals and a peculiar policy paralysis. Despite the glaring need for change, Congress seems to be sinking in the morass of failing leadership and does not have the apparent energy to rediscover itself.

Two states, Gujarat and Tamil Nadu, both run by political parties in opposition to the Congress - the BJP and J Jayalalitha's AIADMK, respectively - could, perhaps, show the way. Both seem to have realised that their citizens, if confronted with choice of paying a premium for stable and uninterrupted power, versus cheaper but unstable power, are increasingly choosing the former.

According to Barun Mitra, director of the New Delhi-based Liberty Institute, Tamil Nadu has hiked the price of electricity for the first time in a decade this year and farmers have accepted the increases. As for Gujarat, it built a parallel grid offering stable electricity at higher prices.

Gujarat's Narendra Modi, as he positions himself as the BJP's prime ministerial candidate in national elections to be held in 2014, despite charges of rights violations by victims of the Gujarat carnage in 2002, realises that his governance record can obliterate or blur those charges.

Mr Modi was one of those chief ministers last week taunting the Congress government for allowing half of India to be enveloped by darkness. The new power minister, Veerappa Moily, who ironically took charge on the day of the blackout, has set up a three-member committee to go into the fiasco.

But if truth be told, the time for bureaucratic buck-passing is long over. If India has to find her feet and return to the front pages of equitable growth, the political class must show that it has the capacity to lead. Reforms on the power front must cut both ways.

 

Jyoti Malhotra is a political and foreign affairs analyst based in Delhi

On Twitter: @jomalhotra