United States, which recently suffered from Century’s worst power blackout last month has called for Power Sector Reforms in India.
“Obviously, we’re pleased that the lights are back on, that the power is back to this large amount of people who did not have electricity,” State Department spokesman Patrick Ventrell told reporters Wednesday.
Declining to comment on a suggestion that India’s reduction of oil imports from Iran because of or lack of progress on the India-US civil nuclear deal may have contributed to the crisis, he said: “I’m not aware that that’s the case.”
“I mean, I think it would be a little difficult for me here from the State Department podium to give a deep analysis of the internal energy environment in India in terms of how their electrical grids work,” Ventrell said when pressed.
“I think that would be a bit of a stretch. It sounds to me like it’s primarily an internal Indian issue,” he added.
Meanwhile, two energy experts at Washington think tank Brookings Institution in an analysis piece, “Emerging Power Failure in India,” on the blackout said that this crisis must spark reforms in India’s electricity and energy sectors.
“Slow development of domestic resources, costly imported resources, burdensome regulations, and a lack of investment in distribution prevent India from meeting a growing demand for energy,” Brookings Energy Security Initiative’s Charles Ebinger and Govinda Avasarala wrote
Changing subsidy policy and setting market rates for fuel and electricity would lead to more revenue, more investment, and ultimately more reliable energy and electricity sectors, they argued.
US power experts cited by the New York Times suggested that critical circuit breakers on India’s power grid may have been neglected.
“The demand for power in India far surpasses the supply, with around 300 million people without access to electric power,” it noted.
Here is a look at five reforms that the power sector urgently needs.
1. Fuel. Scrap coal nationalisation, till that happens, allow all those holding coal mines to produce as much coal as they can, the incentive being permission to sell at the best price possible. Tax away supernormal profits.
2. Mandate regulators to allow pass-through of fuel costs and state grids to permit open-access. At least those who can afford to buy power at the market price will not be starved of power.
3. Stamp out power theft and subsidised power. No industry can survive if close to 40% of what it produces is not paid for, for some reason or the other. All subsidies should be transferred as income support, leaving the market for power functional.
4. Deploy information technology in the grid. Smart grids can them be programmed to maintain grid discipline cut off states drawing excess power and generators supplying excess power. Shift discipline from compliance by humans to algorithms determined by policy.
5. Invest massively in generation, transmission and distribution, so as to meet latent demand in rural areas. This will trigger structural diversification in the rural economy, create new incomes and boost overall economic growth