Energy

New Delhi: The latest study on the energy balance sheet of the country that is ready to be presented to the union government has all the contents to spoil the broth of growth. An infrastructure advisory study conducted by FICCI-CRISIL on 'Indian Power Sector: Holistic Capacity Building' has warned the government that if urgent steps are not taken to bridge the energy particularly electricity demand deficit, the economic growth might be derailed leaving the country in lurch.

The study says that the country at present is witnessing a very high peak electricity demand deficit of 12-13 per cent and energy shortage of 6-8per cent, with which it is improbable for India to sustain high levels of economic growth. "Electricity for all" is not only an economic imperative but also a social obligation, the FICCI-CRISIL study says, adding, if India is to fulfill its dream of becoming an economic super-power, then the electricity sector has to play a central role in enabling this transformation. India's growth decibels need a concerted action on building adequate capacity in terms of manpower, material and resources to keep pitching at high levels.

The study that is to be presented at India Electricity-2008 to the Ministry of Power on Wednesday emphasises the manpower requirement close to the tune of 20 lakh in trained/skilled category during the current and the next five year plan period. The study suggests the government to create more Industrial Training Institutes (ITIs), other specialised training institutes and to carry out nationwide specialised training programs for generation, transmission and distribution of electricity, including training program on IT enabled applications to meet manpower requirement of this magnitude.

Even the Central Electricity Authority estimates that to meet it requirements, India would needs an addition of at least 161 GW of electricity generation capacity during the 11th and 12th five year plan periods. The government, on its part, has already set aside a fund of Rs 4108 billion (US$ 95 billion) for meeting new generation targets set forth in these plans. These requirements do not include the generation additions of around 40 GW, which slipped during the 10th plan. In the past these slippages were largely due to a lack of an adequate policy and regulatory framework, which have been overcome to a large extent by the enactment of Electricity Act, 2003 and rules and regulations under the Act. Generation targets will require commensurate capacities in downstream ? transmission and distribution, including rural electrification as well as in the upstream ? fuels.

The study, however, gives it credit to the changes brought in the Act of 2003 due to which private players are showing interest to cash upon the investment opportunity in the sector. CRISIL study hopes that investment by private sector will play a prominent role in meeting the generation targets of 11th and 12th five year plans. The study also warns the government of the consequences for remaining dependent on conventional fuel, coal. With increase in imported coal, the cost effectiveness of electricity would soon become unviable. The study stresses the requiement of a holistic capacity building effort for efficient coal mining in India as well as for exploring other sources of generation including gas based generation, hydro and renewable energy sources. However, the study has not given enough importance to the nuclear electricity, which has engulfed the nation for couple of years and which is being projected as the panacea for all energy worries of India once 123-Agreement go through the formalities of US Congress.

The study prescribes the government to increase focus on distribution of electricity, which has been the most neglected area in the power sector. This segment is expected to witness very high investments aided by government grants and soft loans. The eleventh five year plan is expected to pump in approximately, Rs 2870 Billion ($66 Billion) in distribution. The investments in distribution are primarily expected to come from the government sector. The restructured Accelerated Powers Development and Reform Programme (APDRP) for distribution under National Thermal Power Corporation (NTPC) (in towns and cities with population over 30,000) is focusing on adoption of IT enabled applications for reduction of losses in the transmission and distribution system. The study expects this process to strengthen with more investments.

With no denying that there are huge investments required across all the segments of electricity sector, and a significant part of these investments needs to be contributed by the private sector (domestic or foreign). But, the target of electricity to all is quite ambitious, and achieving this would not be easy but is essential for India's economy to realise its potential. In post-liberalisation era, India has emerged as an economic powerhouse and is poised to grow at over 8 per cent per annum over the next decade. It is likely that at present growth rates, India along with the USA and China will be one of the top three economies of the world by 2030, and proper planning, implementation and upkeep of electricity and energy needs should be second to none priority, the study reiterates.