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Rank populism governs Delhi's broken electricity scheme

Wrong-headed pandering to the public, and special deals for the rich, have made Delhi's power supply a shambles. And water isn't much better.

I have a bone to pick with Delhi's chief minister. My bedroom stinks. I blame her ridiculously short-sighted electricity tariff scheme for the stench that permeates my house.

Despite five very fine air-conditioners that I use to fend off Delhi's searing summer temperatures, almost every morning for the past several weeks, I have awakened in a sweat-drenched swelter.

The source of this odoriferous transformation is the rolling blackouts shutting off power to households and businesses across Delhi. This is, admittedly, a fairly common occurrence in this part of the world.

A worsening power-generation deficit, an antiquated grid and the common practice of illegal tapping into power lines create chronic shortages during seasons of peak demand. It is ironic that Diwali is considered the festival of light, considering that power was cut for almost eight hours on the November holiday.

This summer, however, is far worse than normal. And the reason is that New Delhi state government, led by Chief Minister Sheila Dikshit, insists on perpetuating a broken subsidy scheme that has nearly bankrupted the companies that supply the capital with electricity.

Until last week, Delhi's power tariffs had been frozen for years and, as a result, electricity utilities have been running at an increasing deficit. Companies supplying New Delhi with power have lost 60 billion rupees (Dh 3.8 billion) over the past few years. As a result, some have began cutting supply to the city, and thus my pillows now smell like gym socks.

In the rogues' gallery of entities we generally wish harm upon, power companies rank with taxi drivers, Wall Street bankers and telecoms companies, but in this case they are the victims. For some reason - probably electoral politics - Ms Dikshit's government saw fit to ignore the rising cost of power generation and forced private and state-owned companies to take massive losses.

Now, Delhi's Electricity Regulatory Commission has approved power tariff increases of about 26 per cent, which will help utility companies to recover about 12 billion rupees. This is only a fraction of total losses, and more hikes must be on the way.

The reaction from the public and opposition has been shrill. The opposition has demanded an inquiry. Resident associations are demanding an audit of power companies' books and a rollback of the tariff. Ordinary citizens have gone on Indian TV to complain that they are being asked to pay more with no guarantee of better supply.

In a country where 40 per cent of the country lives below the poverty line and close to 60 per cent are malnourished, Indians are understandably sensitive to price rises, but this one was long overdue.

People's anger also stems from the fact that the richest parts of Delhi pay the least for power. Through a bizarre administrative happenstance, the areas where the city's VIPs live pay a fraction of what the rest of the city pays for electricity. They are managed by the city's municipal corporation, which gets power from state-owned, thus heavily subsidised, companies. Even after the hikes, ministers, diplomats and the city's wealthiest people will continue to pay the least. That is morally repugnant and must be changed.

The problem does not stop with power, however. The city is also experiencing a severe water shortage. For the past several weeks, about four million residents have had their water shut off for several hours a day. At the city's largest public hospital, surgeries were cancelled because they had no water to sterilise equipment and wash hands.

Delhi's power and water shortages are partly because of its exploding population and increasing middle class. The real problem, however, is politicians who take populist policies to their illogical conclusion: that poor people must never have to pay more and that people with money can make up the difference. In this case, Delhi has added a unique corollary: the city's power brokers, including Ms Dikshit, pay the least for water and power.

What is most infuriating, however, is that the problem was allowed to almost bankrupt power companies, leaving the people Ms Dikshit was trying to protect sweating in the summer heat.

India, the "I" in Brics and would-be superpower, can't even keep the lights on in its own capital. That more than anything, illustrates just how far the country has to go.

 

Sean McLain is a freelance journalist based in Delhi

On Twitter: @McLainSean