Financial Daily from THE HINDU group of publications
Saturday, Aug 02, 2003
Rural electrification: The positive charge
These requirements are fundamental to the development of the power sector, be it in the public or private arena. As per the current consumption pattern, the domestic sector accounts for 23 per cent of the total, irrigation 24 per cent, commercial and industrial 46 per cent, and others 6 per cent. As per the 2001 Census, the usage of electricity at the household level is only 55.8 per cent. The Census also reveals wide disparities between rural and urban areas and across States. It is rather unfortunate that 56.5 per cent of the rural households and 12.4 per cent of the urban households do not use electricity even today. In absolute terms, 84,754,881 households in the country are still without electricity.
Rural, urban divide
There is a wide disparity in power use between the rural and urban areas. While at the all-India level the gap is 44.1 percentage points, in 11 States the gap is in excess of this figure. Of these, nine States have a differential of more than 50 points. The highest differential between rural and urban areas is in Uttar Pradesh, followed by West Bengal and Jharkhand. And the lowest gap is in Goa, followed by Himachal Pradesh and Punjab.
The wide variation between rural and urban areas as well as among States, besides affecting the quality parameters, creates problems in transmission, distribution and load balancing. First, this imbalance results in power surpluses in certain regions and acute shortages in others. For example, the installed capacity in the eastern region is 15,000 MW, but peak demand is 6,500-7,500 MW and off-peak demand lower, at 4,000-4,500 MW.
Second, the technical losses have increased owing to transmission over long distances from the generation station to the end-users in urban centres. It is estimated that the transmission and distribution losses rise to a staggering 24 per cent at the national level.
Third, the economies of scale is adverse because of poor utilisation of power in the rural areas. The overhead costs of supply and maintenance are high. There is, therefore, a clear need to bridge the urban-rural divide and expand the coverage to rural areas.
Only 55.8 per cent of the households in India are electrified. And it is distressing that in 11 States the figures are even lower. Among the better-illuminated States, Himachal Pradesh ranks top, with 94.8 per cent of households using electricity as a source of lighting, followed by Goa (93.6 per cent) and Punjab (91.9 per cent).
At the other end of the spectrum is Bihar, which has the lowest proportion of powered households (10.3 per cent), followed by Jharkhand (24.3 per cent) and Assam (24.9 per cent).
As for the rural areas, the ranking remains the same Himachal Pradesh (94.5 per cent), Goa (92.4 per cent) and Punjab (89.5 per cent) at the top, and Bihar (5.1 per cent), Jharkhand (10 per cent) and Assam (16.5 per cent) at the bottom.
In the urban areas, Jammu and Kashmir (97.9 per cent) has the highest proportion of households using electricity as a source of lighting, followed by Himachal Pradesh (97.4 per cent) and Sikkim (97.1 per cent). The lowest proportion is recorded in Bihar (59.3 per cent), with Orissa (74.1 per cent) and Assam (74.3 per cent) faring slightly better.
In absolute terms, 84,754,881 households 78,090,874 rural and 66,64,007 urban are yet to be electrified. The potential, to say the least, is vast.
Especially within the domestic sector, while the urban areas are fairly well covered, the rural areas present a big opportunity. Political considerations, however, dictate that the sector, if not directly subsidised, is at least cross-subsidised to a greater or lesser degree. There are also cases of large-scale payment defaults by this sector, often with the help of political support. And losses on account of thefts alone amount to around Rs 20,000 crore annually.
On the technical side, enhancing the coverage would require substantial investments on the distribution networks. This would have to be coupled with the induction of the latest, but most appropriate, technology to reduce losses, cut costs as well as enhance efficiency. Some of the areas where technology could be effectively deployed are: Remote-controlled, unmanned sub-stations; pre-paid metering systems; remote-controlled meter reading; theft/loss detection devises; energy efficiency measures and devices, and so on.
As regards tariffs, a number of States have already demonstrated that a rational domestic tariff structure can be ushered in and implemented effectively. The recent announcement by Tamil Nadu of domestic and agricultural tariffs is a case in point. Political will is required to curb default and theft. Private distribution companies have demonstrated that given a free hand they can curb malpractices and bring defaulters, as well as those indulging in illegal activities, to book.
The Power Ministry has drawn up a roadmap with specific measures for addressing all the problem areas. One measure that is truly positive is the acceptance of village electrification as a `basic minimum service' and the announcement of a specific timeframe coverage of all villages in the next six years and all households by the end of the Eleventh Plan (2012).
Ultimately, reforms will succeed only if they make economic sense to all the stakeholders the generator, the transmitter, the distributor and the consumer. Parliament has taken the first step by generating the Act. The Power Ministry has, in turn, announced a blueprint for development of the power sector. What is now required is the transmission of the reform agenda to the States and distribution of the benefits to the end-user. The case for enhancing the coverage and content in the domestic sector is strong. All that is required is a strong will to convert the challenge into opportunity.
(The author is Director of Census Operations, Tamil Nadu and Pondicherry. The views are personal.)
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