People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 05

February 3, 2013




Seminar Held on

Power Crisis, Burdens & Alternatives


THE craze for private power plants, debilitating the public sector, dependence on natural gas which is not available adequately and its high cost, mismanagement of water resources in reservoirs and lack of efficiency improvement in transmission and distribution system are some of the main reasons for power shortage and higher tariff burdens in Andhra Pradesh. While elaborating these and other issues  at a seminar on Power Crisis  Burdens  Alternatives organised by Centre for Power Studies (CPS) at Sundarayya Vignana Kendram in Hyderabad on January 27, Dr E A S Sarma, energy expert and former secretary, ministry of power, government of India, has agreed with the view that peoples movements are necessary to bring pressure on the governments to correct the course of neo-liberal reform process they have been pursuing. He found fault with the approach of the central and state governments in permitting private merchant power plants in the state indiscriminately, unmindful of protests of the people against disastrous effects on environment and livelihood of the local people.


Making it clear that setting up a nuclear plant would take 15 years and that the capital cost has gone up by four to five times, Dr Sarma has asserted that the people cannot bear the high cost of nuclear power. Moreover, the problem of disposal of nuclear waste continues to be unresolved, he has said. He has lashed out at the governments for starting land acquisition for the proposed nuclear power plant at Kovvada in Andhra Pradesh, without getting environmental clearance which is illegal. As convener of Forum for Better Visakha, Dr Sarma has been conducting a crusade against these policies of the governments and such unwarranted projects. Rebutting the calumny being spread by the governments and protagonists of the neo-liberal reform process that opposing these projects is the cause for shortage for power in Andhra Pradesh, Dr Sarma has made it clear that there is no shortage for installed capacity and that about 16,000 MW of available installed capacity could not be fully made use of due to shortage of natural gas, domestic coal and mismanagement of water resources.


Explaining that the shortage is artificial and man-made, Dr Sarma has pointed out that the GoI has weakened Coal India Limited and given captive coal blocks to the private sector which has turned out to be a scam as pointed out in the report of the Comptroller and Auditor General of India. He has demanded a thorough investigation into the way in which the capital cost, estimates of reserves of natural gas and its price and production in the D6 block of KG basin have been manipulated by Reliance Industries Limited with the active connivance of the government of India. Dr Sarma has explained that RIL had announced a deposit of 10 trillion cubic meters of natural gas in the D6 block, shown an inflated capital cost of 8 billion dollars and proposed to produce 80 million metric standard cubic meters.  While the cost of production of natural gas is about 60 cents per mmbtu, the empowered group of ministers headed by the then minister for finance, Pranab Mukherjee, had fixed a higher price of 4.2 US dollars per mmbtu accepting the contrived formula for price fixation submitted by RIL against the price of 2.34 US dollars quoted by the same company in the international competitive bidding floated by NTPC. Dr Sarma has recollected that he had written several letters to the Prime Minister, Manmohan Singh, and the then chief minister of AP, Y S Rajasekhara Reddy, against those manipulative moves but to no avail. Though Dr Sarma, as the then advisor to the Planning Commission, and several others had cautioned that gas would not be available, the TDP government had gone ahead with permitting gas-based private power projects. Seeking upward revision of price of natural gas, RIL has now reduced production of natural gas to 29 mmscmd with a view to threatening the GoI.  If the recommendations of the Rangarajan committee, appointed by the GoI, are accepted, the price of natural gas would go up to 10-11 US dollars per mmbtu, leading to hefty hike in cost of generation of power which would affect the people, he has explained.


Dr Sarma has cautioned that with the private power plants being permitted by the central and stage governments and weakening AP Genco, Andhra Pradesh would face problems and litigations for fifteen years, besides increase in power cost and power shortage.  Stressing the importance of improving efficiency of transmission and distribution system, Dr Sarma has pointed out that Sankar Sen, the then minister for power in the erstwhile Left Front government in West Bengal, had given importance to improvement of efficiency and transformed the state into a power surplus one within two years. Dr Sarma has suggested solar power as an alternative in the long run and explained that if one per cent of land surface in AP is used for setting up solar plants, power required for ten years would be available. The causes for shortage of hydel generation need to be studied and mismanagement corrected, he suggested.


N Sreekumar of Prayas Energy Group of Pune has explained that power consumption in AP is growing faster than at the national level and that AP Genco, AP Transco and the power distribution companies are among the best utilities in the country. Explaining several problems being faced in the power sector, he made several suggestions for improving its efficiency. Finding fault with permitting about 60,000 MW of private power plants in four districts in AP, he wondered whether infrastructural facilities would be available for the same.  Sreekumar has pointed out that in the Twelfth Plan, it is proposed to permit 7 lakh MW to be added, out of which 75 per cent is proposed to be permitted in the private sector.  Cheaper power should be given to the 70 most backward districts identified in the country, he suggested. Sreekumar has suggested that priority should be given to efficiency improvement, development of conventional energy and encouragement to renewable energy, including solar energy.  M Venugopala Rao, convener of Centre for Power Studies, presided and G Eswar proposed a vote of thanks.