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India's power backup bill Rs 130,000 cr a year

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It’s not just suffering the blackouts. The cumulative cost of nationwide power outages is a staggering Rs 1,00,000 crore. That’s the amount Indians spend on power back-up equipment like gensets, batteries and inverters. Here’s the message for policy makers: That money if collected from harassed power consumers is enough to put up power plants to generate 25,000 MW of electricity — almost 20% of the present generation level.

Besides, the country also spends Rs 30,000 crore every year to operate inefficient power back-ups using gensets which belch smoke and inverters that emit acid fumes, releasing an additional 1.9 million tonnes of carbon dioxide additionally every year.

A ‘reliability surcharge’ of 50 paisa per unit, which is far less than the extra charges consumers are incurring to maintain the backup, can support rapid capacity build-up.

Power Grid Corporation of India has estimated the value of lost opportunity for the country in 2008-09 at Rs 2,89,000 crore. In GDP terms, this means a loss of nearly 6%.

To realize our ambition to grow by 9%, India needs power generation to grow by 9% annually after wiping out the substantial existing deficit.

On the brighter side, there are examples of consumers, like in Mumbai, who benefit from a 24x7 reliable power supply by paying a reliability charge. Consumers bear significant annual operating expenses for back-up power equal to almost one-third of the capital costs. The efficiency level of such equipment is often poor. Besides, fuels such as diesel are subsidized by the government, adding to the tax-payers’ burden.

For the full report in the TOI, click here

Not just Mumbaikars, but consumers in any city will be willing to pay a marginally higher price for reliable supply (though, in fact, the Mumbai power tarriffs are comparable to those for any other city). But, the big difference between Mumbai and other cities, say Bangalore, is that whereas the service provider in Mumbai can readily build up capacity to meet the growing demand, the one in Bangalore just cannot. And, the reason plainly is because of one being in the private sector, and the other the public sector.

In essence, it can be said that the Rs 130,000 cr a year burden that the country is carrying, apart from the Rs 289,000 cr in terms of lost opportunity value, is solely on account of the governments' strangle-hold on the power distribution sector.

More on the subject, may be accessed at http://praja.in/en/blog/murali772/2008/05/28/imperatives-privatisation-power-distribution

Muralidhar Rao
 

 

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