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Politics stays electric, but India reels under 16 hour power cuts

C R Sukumar & Sobia Khan, ET Bureau | Jun 21, 2012, 07.18AM IST

BANGALORE/HYDERABAD: The country is reeling under a severe power shortage that has forced people to suffer 16-hour supply cuts in some regions as fuel scarcity has hit generation and the precarious health of utilities has ravaged the finances and payment schedules in the sector. The situation is particularly bad in north India, which had a deficit of 3,000 megawatts last month, as demand has soared due to the heat wave. But even in the southern states of Karnataka and Tamil Nadu, distribution bottlenecks and scarce supply have hurt domestic and industrial consumers with power deficit rising to 4,350 mw in May, officials said. Residents of Delhi and neighbouring areas are complaining of power cuts, but the Association of Power Producers says the Capital is much better off than most other parts. "The southern region is facing power cuts of 8-16 hours and many rural areas are going without electricity for days together. The way forward is resolving regulatory and policy issues in the sector," said Ashok Khurana, the association's director-general. With coal supply stagnant and gas production sharply down, about 37,000 mw of capacity out of 178,000 mw monitored by the Central Electricity Authority has been shut down. This is primarily because of fuel shortage and partly due to plant maintenance. "A significant amount of capacity is stranded due to non-availability of gas and coal. It is further getting impacted due to regulatory issues. Coal India has decided not to import coal," said Raaj Kumar, CEO, GMR Energy. "The investment climate has suffered significantly, and this will hit growth in the power sector. State electricity boards do not have the ability to pay for power. Huge accumulated losses are leading to frequent load-shedding. The situation is gloomy," he said. Most coal-fired power plants are operating at 60-70 per cent capacity as Coal India is supplying only 65 per cent of the requirement. The balance is met through e-auctions or imports, which are costly. Inefficient state utilities have aggravated the problem, industry officials said. "There is power available in the market, but loss-making state electricity boards have no money to buy it. They do not want to increase their revenue

gap," said K Rajagopal, CEO (energy division), Lanco Infratech. Khurana of the Association of Power Producers said, "About 9,000 mw of gas-based projects have no fuel to be commissioned." Costly imported coal delaying many projects "(The shortage of) coal and delayed environmental and regulatory approvals have held up many other plants," said Khurana of the Association of Power Producers. In Andhra Pradesh, industrial users are under severe strain. "The situation is bad and power shortages are affecting the industry, especially the small and medium enterprises sector," said Y Harish Chandra Prasad, chairman of Malaxmi Group. The high cost of imported coal has delayed thousands of megawatts of capacity being set up by large private producers, including Reliance Power's 4,000-mw ultra mega power project. Chandrasekhar Reddy, member secretary of Andhra Pradesh's energy coordination committee, said the shortage could be as high as 3,900 mw or 93 million units a day during the peak season. But he added that the arrival of monsoon had improved the situation. Reddy said the long-term solution was to build power plants through state-owned entities. "Of course, till then, rural, domestic and overall industry will have to bear the shortages," he said. SL Rao, the first chairman of the CERC, said states such as Karnataka have not managed the power sector well, while Power Grid has not done enough in southern India. "There is callousness in power plant management as these are not maintained on a regular basis ... We need to privatise our distribution system to deal with power shortage," he said.