There is nothing called a free lunch. Haven’t we heard that before? We have, but not the politicians. For them electric power is a vote catcher, one that would get them access to the seat of political power.
Towards the fag end of his tenure, the then Chief Minister, Chandrababu Naidu felt that the ground was slipping away from him. The reason for this political earthquake was the promise of free power by the then opposition leader, Rajasekhara Reddy. A startled Naidu did not know how to react, for he knew that the theory of free electricity was flawed. Rajasekhara Reddy in his eagerness to achieve the ultimate ambition of life did not.
Today, the doctor from Pulivendula must be ruing the pledge he made. Farmers along with self-seeking politicians are paying back him in the same coin that Congress leaders once used to beat Naidu with.
To understand the economics of power let us look at the basics. The State-owned power utilities, which includes AP Genco has an installed capacity of 6822 MW of power from four sources including thermal, hydel, gas and wind. Apart from this, the State has numerous independent power producers including GVK, Lanco Kondapalli, and Spectrum among others.
To top it all, some of the units are idle due to lack of gas supplies, while the State government continues to pay the IPPs for power they are not producing! Blame it on the agreement signed with the IPPs during Naidu’s time.
Against the total installed capacity of 12,040 MW in the state, the current production is only 5,300 MW while the demand is around 7,500 MW every day. This gap has led to frequent grid disturbances with frequency levels going dangerously low, which can lead to a total collapse of the southern grid.
This has forced the State to go with a begging bowl to other states and continue to draw excess power from the central grid, far beyond what is allocated. Still the economics of demand and supply remains. The gap between supply and demand, which is presently at 1,500 MUs per day, is likely to reach 2,173 MUs in the next 45 days.
The concept of free power began when Punjab State Electricity Board did away with metering of electricity for farmers and charging a flat rate based on the horse-power of pumpset installed. The government there had an eye on the vote bank when it took the decision that sent the state electricity board into bankruptcy. Haryana followed and in a matter of time, both the state governments realised that. But YSR felt that the scenario in AP was different, with farmers consuming poison like there was no tomorrow.
While in opposition, YSR and specially the Communists had led a strident opposition to the power policies of the CBN government. This reached a flashpoint when police fired on a crowd marching towards the Assembly, at Basheerbagh, killing two protestors. After assuming power the YSR government provided compensation to the next of the kin of those killed and installed a memorial at Basheerbagh. Today, the shoe is on the other foot.
CBN’s footmen are fronting farmers to stage sit-ins, rasta-roko, smashing up sub stations, locking up staff. YSR has appealed to the farmers not to panic or resort to agitation. “Care is being taken to continue power supply for seven hours to save their crops,” he pleaded. But who cares. For Naidu this is the moment he has been waiting for. He wants nine hours of power supply, and wastes no time in telling the farming community of his oft-quoted line in the run-up to the Assembly elections “In YSR reign, electricity wires can be used as clotheslines.”
The Congress leaders are at a loss on what to do. Kesava Rao and team did muster up courage to launch a counter attack, by visiting farmers and declaring all was well. For YSR, this is a headache he could have done well without. As it is, the doctor is finding it tough to handle the IIT issue, which has come on top of the Telangana and Pothireddypadu issues.
Another sticking point for YSR is that for every unit consumed by the farmers, the State has to pay AP Transco in line with the demands of the AP Electricity Regulatory Commission. The subsidy bill will inflate to beyond Rs 2,500 to 3,000 crores this year.
The shortage of more than 15 million units a day, will cost the government close to Rs 700 crores (if not more) in the next three months. It’s crunch time till March.
YSRs decision to impose a power cut on industries will not go down well with IT companies and prospective investors. His decision to resort to load shedding in the urban areas can also generate a backlash at the hustings.
So what does he do? What are the options before the government? These and other issues will be dealt in our next post that will be out on Friday.
Towards the fag end of his tenure, the then Chief Minister, Chandrababu Naidu felt that the ground was slipping away from him. The reason for this political earthquake was the promise of free power by the then opposition leader, Rajasekhara Reddy. A startled Naidu did not know how to react, for he knew that the theory of free electricity was flawed. Rajasekhara Reddy in his eagerness to achieve the ultimate ambition of life did not.
Today, the doctor from Pulivendula must be ruing the pledge he made. Farmers along with self-seeking politicians are paying back him in the same coin that Congress leaders once used to beat Naidu with.
To understand the economics of power let us look at the basics. The State-owned power utilities, which includes AP Genco has an installed capacity of 6822 MW of power from four sources including thermal, hydel, gas and wind. Apart from this, the State has numerous independent power producers including GVK, Lanco Kondapalli, and Spectrum among others.
To top it all, some of the units are idle due to lack of gas supplies, while the State government continues to pay the IPPs for power they are not producing! Blame it on the agreement signed with the IPPs during Naidu’s time.
Against the total installed capacity of 12,040 MW in the state, the current production is only 5,300 MW while the demand is around 7,500 MW every day. This gap has led to frequent grid disturbances with frequency levels going dangerously low, which can lead to a total collapse of the southern grid.
This has forced the State to go with a begging bowl to other states and continue to draw excess power from the central grid, far beyond what is allocated. Still the economics of demand and supply remains. The gap between supply and demand, which is presently at 1,500 MUs per day, is likely to reach 2,173 MUs in the next 45 days.
The concept of free power began when Punjab State Electricity Board did away with metering of electricity for farmers and charging a flat rate based on the horse-power of pumpset installed. The government there had an eye on the vote bank when it took the decision that sent the state electricity board into bankruptcy. Haryana followed and in a matter of time, both the state governments realised that. But YSR felt that the scenario in AP was different, with farmers consuming poison like there was no tomorrow.
While in opposition, YSR and specially the Communists had led a strident opposition to the power policies of the CBN government. This reached a flashpoint when police fired on a crowd marching towards the Assembly, at Basheerbagh, killing two protestors. After assuming power the YSR government provided compensation to the next of the kin of those killed and installed a memorial at Basheerbagh. Today, the shoe is on the other foot.
CBN’s footmen are fronting farmers to stage sit-ins, rasta-roko, smashing up sub stations, locking up staff. YSR has appealed to the farmers not to panic or resort to agitation. “Care is being taken to continue power supply for seven hours to save their crops,” he pleaded. But who cares. For Naidu this is the moment he has been waiting for. He wants nine hours of power supply, and wastes no time in telling the farming community of his oft-quoted line in the run-up to the Assembly elections “In YSR reign, electricity wires can be used as clotheslines.”
The Congress leaders are at a loss on what to do. Kesava Rao and team did muster up courage to launch a counter attack, by visiting farmers and declaring all was well. For YSR, this is a headache he could have done well without. As it is, the doctor is finding it tough to handle the IIT issue, which has come on top of the Telangana and Pothireddypadu issues.
Another sticking point for YSR is that for every unit consumed by the farmers, the State has to pay AP Transco in line with the demands of the AP Electricity Regulatory Commission. The subsidy bill will inflate to beyond Rs 2,500 to 3,000 crores this year.
The shortage of more than 15 million units a day, will cost the government close to Rs 700 crores (if not more) in the next three months. It’s crunch time till March.
YSRs decision to impose a power cut on industries will not go down well with IT companies and prospective investors. His decision to resort to load shedding in the urban areas can also generate a backlash at the hustings.
So what does he do? What are the options before the government? These and other issues will be dealt in our next post that will be out on Friday.
3 comments:
good article...
WHY NOT WE MAKE some sectors entirely government-authority- free...such as education, power, agriculture, and law.
i am getting depressed with the facts....how bad we are as people.
We claim this India is great and and is country of GOD...but we do not have moral values at all. We are just liers.
See CBN...., no more examples needed.
Some one should come, but who that will be?
Whoever it is, i will support.
For the time being, i am eager to watch the growth of Loksatta.
Surya...
The problem is not merely free or paid power. Power deficit has been an eternal problem to India, and one of the reasons why we lag behind on industrial front to China which has over capacity, about 3 times as much needed for their current consumption.
I expect nuclear power comes in hand to supplement power hungry nation and has large potential going forward.
Coming back to subsidy and politics, 3000 or 5000 crores is not a huge bill or coming at a significant cost of other infrastructure, as the GDP grows, so the tax revenue and exchequers money should be growing at an healthy rate YoY. It's not a big deal to increase money supply in the economy to fill the deficit.
I must once again stand to say that it is power deficit, but not money deficit problem.
Comgrats Vikram,
Good story on prevailing conditions. To know more about power sector reforms and the philosophy of free power to farmers i suggest that everyone should read 'vidyutvalayam', comphrehensive and incisive work done by K.Ramachandra Murthy while editing 'vaartha'.
kishen
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