Narendra Modi’s remarkable rise
to power has given hopes for an economic turnaround in the country as well for
the power sector. The BJP's election manifesto promised a 'comprehensive energy
policy' to harness oil, gas, hydro, ocean, wind, solar, coal and nuclear
energy.
One of Modi's key accomplishments in Gujarat
is said to be his reform of the power sector, making the state the only one
with a consistent power surplus. Gujarat, however, has ample power fuelling
ample industry, and Modi wants to both keep it that way, and reach the remotest
parts of the country too. This is an activity to strengthen the core of the
country. One is his abiding interest in providing 24×7 electricity to every
nook and cranny in India. Expanding clean power generation will be his
administration's top energy-related priority, especially solar and wind energy,
because it has the potential to create jobs and supply power to millions of
scattered households not connected to the grid. The new government is also
expected to reinstate accelerated depreciation for investments into wind energy
projects and accord priority sector lending for the entire renewable energy
segment to give a fillip to non-conventional energy resources.
What Modi's government did in Gujarat was
less to do with building new power plants and more to do with reforming how
electricity was distributed and paid for. His government re-negotiated purchase
agreements with private power companies set up a police unit to stop thieving
of electricity and ended unmetered supplies to rural areas.
The Coalgate scandals of the UPA highlighted
the incompetence with which some coal blocks were parceled out for a pittance
to the highest bribe-givers from the private sector, but India continued to
import massive quantities of expensive coal to keep generating electricity. If
Modi decides to run the Coal Ministry himself he will certainly be able to
deliver results in a time-bound manner. Reducing coal imports will reduce the
burden on our foreign exchange reserves also and will become a key component of
increased GDP and reduced deficits. It might, with the generation of abundant
electricity using cheaper coal, actually bring down the high costs of
electricity at the retail level too.
India is structurally short of electricity,
and it's hard to see how the economy can be ramped up significantly, especially
in power-hungry sectors such as manufacturing, without the provision of
reliable power at prices high enough to ensure sustainable supply, but not so
high as to choke growth. Power sector reforms must now be driven by simple
straight forward thinking based on ground realities with customer at the centre
and full involvement of states rather than complicated, central driven
initiatives. Sorting out the disconnect between retail prices and the actual
cost of producing and distributing electricity is also just the tip of the
iceberg in ensuring sufficient power for economic growth.
It remains to be seen whether he can
replicate the electricity success of his home state but only he can after all
being the country's first energy literate Prime Minister!
InfralineEnergy Power Knowledgebase Team
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