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Editorial | March 2015

Watts tripping?

Way back in 2012, the then Comptroller & Auditor General Vinod Rai had estimated that the country had lost Rs 1.86 lakh crore due to the way coal blocks were handed out. The resulting scandal may well have been the single most important reason for the eventual demise of the UPA. Indeed, now it looks like the CAG´s figure might have been a little conservative, looking at the amounts that the first phase of auctions have thrown up.

The consumers might stand to gain Rs 30,000 crore due to reduction in tariffs, and the auction of 19 coal blocks might fatten the kitty of coal-producing States by Rs 1 lakh crore. And this is only the first round. The other big achievement that this round has brought to the fore is a demonstration of a means of leveraging natural resources in the most fair and transparent manner possible.

By the looks of it, the government is now looking at a complete revamp of Coal India, with an ambitious target of doubling production to 1 billion tonnes from the coal behemoth by 2019. SPVs are being formed, railway linkages are coming up and environmental clearances are being granted. The 10 per cent divestment in CIL (which yielded Rs 24,000 crore) has also been a success. This part of the reform story is finally beginning to gain some traction.

However, the Land Acquisition Act has run into some rough political weather. And if the government caves in to the loud opposition demands, many infrastructure projects (including smart cities, rural electrification programmes and industrial corridors, to list a few) will be stuck in limbo. Infrastructure Today (a sister publication of Power Today) had in its previous issues recommended that: land for such projects need not be bought but be taken on a 99-year lease and that some token compensation be made such that the land owner can buy a piece of land elsewhere for agriculture and finally a share in the super-profits can also be provided to bring the land owner an upside. This solution can ensure that the capex for such projects is contained, the land owner continues to get rent for subsistence, he does not end up destroying his wealth and capital and he can continue to be an agriculturist with another piece of land. Renting land for infra projects is a viable solution.

Again, short-term myopic moves by political interests could also derail reforms in the power sector. As the PM himself has rightly commented, many political parties promise free power as an election sop, which ultimately works out to the detriment of both consumers and power companies.

As a recent World Bank report has pointed out, India has seen some progress in reforming generation and transmission, but distribution still remains a problem area, subject to the vicissitudes of political pushes and pulls. Unless the distribution gets reformed such that SEBs become credible paymasters, it does not become a sustainable proposition. And renewable will suffer the same fate. It is time to fix the tail of this business where all efforts are ´tripping´.

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17 Oct 2016
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20 Sep 2016
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