Taking politics out of power

The private sector will be even less capable of addressing these non-mining challenges. Though the private sector would be effective at mining coal, the problems of transportation, land acquisition and environmental approvals would remain. In fact, private involvement is likely to vitiate the environment and make its resolution even more difficult. It is no wonder that the coal blocks allocated for captive power generation remained mostly unexploited. Governments cannot afford to be seen to be supporting private participants in "dispossessing" poor people and "damaging the environment". Nor would the private firms agree to policies like provision of employment to land losers, long used by the CIL to buy out local opposition to its projects.

All this means India's coal crisis can be resolved only through a mature political process. A reasonably generous relief and rehabilitation policy, which enjoys bipartisan political support, has to form the centrepiece of any such process.

At least two-thirds of the national average distribution losses at 23 per cent are commercial losses, mostly in the form of billing deficiencies or pilferage. While systematic energy audits and rigorous enforcement can help lower losses, the biggest contribution to commercial loss reduction has to come from the large and widely known pockets within each distribution utility where pilferage is rampant and enjoys wide political support.

Tariff increase, which is critical to the commercial viability of private investments in generation is another deeply political issue. It was precisely to depoliticise them that regulatory authorities were established. Unfortunately, they have become handmaidens of governments. Bipartisan political support is again necessary for governments to restore regulatory credibility and depoliticise the process of tariff setting.

Agriculture power reforms assume great urgency in view of the deep-rooted systemic distortions engendered. Free farm supply adversely affects the quality of rural electricity supply, indiscriminate use of motors deplete groundwater levels, and unmetered supply creates accounting problems and complicates distribution loss reduction efforts. The Gujarat model of laying dedicated agriculture feeders incurs massive capital investments. Further, the massive expansion of rural feeders would inevitably raise net technical losses, besides increasing the potential for commercial losses, while doing little to address the issue of long-term sustainability of farm supply.

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