Louis Proyect: The Unrepentant Marxist

August 5, 2012

India’s Power failure: The culprit – Crony Capitalism!

Filed under: energy — louisproyect @ 6:45 pm

Vijaya Kumar Marla

(The author is an electrical engineer who has designed over 600 Turbine generators that are still working all over India and abroad. He is also a long-time revolutionary.)

India’s Power failure: The culprit – Crony Capitalism!

By Vijaya Kumar Marla

This is what I had gathered from News reports: A major power failure Tuesday has left hundreds of millions of people in northern and eastern India without power, making this one of the worst power outages in history. The blackout affected an area encompassing about 670 million people, or roughly 10 per cent of the world’s population. This has been declared by NDTV to be the worst power crisis EVER! According to 2011 census data, only 67.2% of India’s homes have electricity. Besides, in Uttar Pradesh, the most populous northern state, only 36.8% of homes have access to electricity, compared to 99.1% of Delhi homes. One contributor to the blackout, TV analysts theorize, could be stepped up power demand from farmers who need to run water pumps (to cope with drought conditions). After of the hottest summers in recent years, the North of India has seen a weak monsoon, which has meant lower hydroelectric generation of power than expected. In states like UP, Punjab and Haryana, farmers have resorted to using water pumps, drawing more power than usual.

“Power swing is suspected on account of some transmission line tripping, causing grid failure. It requires further investigation to ascertain the real cause,” says an official. India’s power sector has been suffering from a shortage of fuel for plants (coal and gas, mostly). Now the blackouts are showing just how creaky the nation’s electricity grid is, says WSJ, on July 31, 2012. Fuel shortages are crippling coal and gas-fired plants, forcing them to run below capacity or shut down for long stretches; state utilities have billions of dollars of accumulated losses; and, as has been on stark display, the nation’s creaky grid needs upgrading as per NY Times. Government officials said a sudden spike in load in several states initiated a cascading failure of the national grid, but declined to say which states were responsible. Several Indian states face chronic electricity shortages. In Uttar Pradesh, the most populous state and the site of the first problem that officials say caused the blackout, power demand outstripped supply at peaks hours by 15.3% in June. The Himalayan region of Jammu & Kashmir had a 25% peak power deficit; it was 16.3% in Bihar and 13.4% in the southern state of Tamil Nadu 13.4%.

Theories for the extraordinarily extensive blackout across much of Northern India included excessive demands placed on the grid from certain regions, due in part to low monsoon rains that forced farmers to pump more water to their fields. Sushil Kumar Shinde, the power minister, who spoke to reporters, did not specify what had caused the grid breakdown but blamed several northern states for consuming too much power from the national system. Surendra Rao, formerly India’s top electricity regulator, said the national grid had a sophisticated system of circuit breakers that should have prevented such a blackout. But he attributed this week’s problems to the bureaucrats who control the system, saying that civil servants are beholden to elected state leaders who demand that more power be diverted to their regions – even if doing so threatens the stability of the national grid. “The dispatchers at both the state and the regional level should have cut off the customers who were overdrawing, and they didn’t,” Mr Rao said. But India’s power generation capacity also has not kept pace with growth. Demand outpaced supply by 10.2 per cent in March, government statistics show.

India depends on coal for more than half of its power generation, but production has barely increased, with some power plants idled for lack of coal. Many analysts have long predicted that India’s populist politics were creating an untenable situation in the power sector because the government is selling electricity at prices lower than the cost of generating it. India’s public distribution utilities are now in deep debt, which makes it harder to encourage investment in the power sector. Phillip F Schewe, a specialist in electricity and author of the book “The Grid: A Journey Through the Heart of Our Electrified World,” said the demand pressures on India’s system could set off the sort of breakdown that occurred on Tuesday. In cases when demand outstrips the power supply, the system of circuit breakers must be activated, often manually, to reduce some of the load in what are known as rolling blackouts.

But if workers cannot trip those breakers fast enough, Mr Schewe said, a failure could cascade into a much larger blackout. (Perhaps Mr Schewe is unaware that the power systems in India are as sophisticated and modern as anywhere else. In fact, Indian companies export power plant equipment to many countries, after successful competitive bidding – Marla). India’s Power Minister, Mr. Shinde, when asked about the reasons for the failure of grids, said some states are drawing electricity over and above their limits. “This was creating problems,” the minister said. “This morning only, I was told (by officials) that about 3,000 MW extra power has been over drawn from the Eastern Grid. We have given the direction to either stop it (over drawal) or take action against them,” he added. “Grid incident occurred at 13:00 hours affecting the Northern Grid, Eastern Grid and North Eastern Grid,” National Load Despatch Centre (NLDC) said.

The Confederation of Indian Industry had estimated that businesses lost between Rs 2.5-5 billion because of the blackout. The Associated Chambers of Commerce and Industry (Assocham) said the blackout had “severely impacted” business activities. The Federation of Indian Chambers of Commerce and Industry: Reforms that would help make coal and gas available as per the nation’s requirements must no longer be held back. If Coal India limited is unable to meet the coal requirements of industry and the power sector, then the government must think of breaking it down in smaller segments that would be more manageable. Alternatively, the responsibility for management of coal mines can be shared with the private sector for bringing in greater efficiency in operations.”

The image of it looks very bad,” said Naresh Chandra, a former ambassador to the United States and former electricity regulator in New Delhi. But Mr. Chandra said the problems were fixable and that international investors should not lose heart. Power experts in the United States speculated that inattention by those manning crucial circuit breakers on India’s electrical grid may have led to the blackout. India’s basic power problem is that the country’s rapid development has led demand to far outstrip supply. That means power officials must manage the grid by shutting down power to small sections of the country on a rotating basis. But doing so requires quick action from government officials who are often loathe to shut off power to important constituencies.

Whatever the excuses put forward by the government, years of neglecting power sector reform and misplaced investment priorities are at the root of the crisis. “I think over the next decade the investments of the government and particularly the investments of the private sector will be a big part of the solution here,” says Professor Arun Sundararajan at NYU’s Stern School of Business. Many of India’s major corporations and industrial groups generate their own power and thus were spared much of the disruption from the blackouts on Monday and Tuesday. Many apartment and office buildings in India’s major cities have their own generators as well. And as India’s power grid becomes ever more unreliable, private power alternatives will further proliferate, despite their relative inefficiency.

Notwithstanding the suggestions from environmental groups and the government’s own plans to increase the share of renewable energy, the intractable problems still plaguing India, such as inadequate infrastructure, a crippling power shortage and, as many critics point out, a yawning absence of governmental action and leadership. Ian Bhullar, writing on August 3, 2012 says that the reasons may be much more systemic, including over-dependence on oil, gas and coal imports, corruption that has led to the degradation of the power network, and widespread theft of power from the national grid. As per Moody’s, the rating agency, the domestic power sector suffers from inadequate coal supplies, inability to transport imported fuels to power stations located inland as well as unreliable distribution networks. Also, the sector has “higher-than-usual” losses associated with distributing energy apart from losses related to fraud and corruption by consumers who don’t pay for the energy their use, it said.

Some regions of the grid are drawing more power than they are entitled to. The officials regulating the power allocation are helpless because powerful vested interests demand that they get more power for themselves. In a poor backward state like Uttar Pradesh, rich farmers, who are also politically powerful, use most of the subsidized power allocated to agriculture. Poor farmers cannot afford to install pump-sets. This is a classic case of crony capitalism at work. Capitalist agricultural practices demand intensive inputs in the form of water, power, chemicals etc., and only the powerful rich farmers can go for this.

The gross misuse of political power by the rich peasants and industrialists with active collusion of politicians and government officials has resulted in the precipitation of the crisis. Here is a comparison of Transmission losses in India and comparable countries (countries with grids stretching over long distances).

Electric power transmission and distribution losses (% of output) Electric power transmission and distribution losses include losses in transmission between sources of supply and points of distribution and in the distribution to consumers, including pilferage. Source: International Energy Agency (IEA Statistics © OECD/IEA, http://www.iea.org/stats/index.asp), Energy Statistics and Balances of Non-OECD Countries and Energy Statistics of OECD Countries, and United Nations, Energy Statistics Yearbook.

Country name 2007 2008 2009
Australia 6 7 7
Brazil 16 17 17
China 6 6 5
India 23 21 24
Russian Federation 10 11 11
Saudi Arabia 8 9 8
South Africa 8 9 10
United States 6 6 6

It is amply clear from the above table, a lot of pilferage takes place, often with the connivance of the concerned officials and the theft is accounted as T&D losses. The rich do not pay for what they steal. There is an old saying in Hindi, which translates roughly as: “the thief is accusing the policeman of theft”. This assault has already begun. The business elite, who are in fact little affected by the Blackout, reel out extraordinary figures of losses to the business interests and call for privatization of public sector power and power equipment companies, oils and coal business. This is neoliberalism at work. Grabbing public wealth for private gain, when it is they, the rich and powerful, who had misused public wealth (grid power) and now accuse the same poor government power distributors of mismanagement and shout at the top of their vices that everything should be privatized.

The comment above that most of the major industrial giants have been spared during the blackout is true because they have been encouraged by the government in the last few decades to install captive generation. And the shortage of natural gas is the handiwork of Reliance Petro Corporation, who according to reports, have cheated the government of gas production figures in the KG Basin and other offshore wells, by deliberately quoting wrong figures and diverting the gas to their own power plants. And the government is unable to bring Reliance Corp. to book as it is believed that that this monopoly company has more than a fourth of Indian lawmakers on its payrolls. In fact, one of the previous ministers, who headed the Petroleum Ministry, was a long term agent of Reliance Petro and he had been installed there to look after the interests of his master. To conclude, we will be witnessing a full scale assault on the public sector in the coming days. Unfortunately, no one from the Left has opened his mouth till now. Amen!

9 Comments »

  1. Ah, yes, the secret of the new Indian prosperity that the commercial press is periodically raving about. Divert the bulk of the Nation’s resources to enrich a parasitic minority while the masses of toilers are still forced to sit in the dark & shit in the streets. Yet some blame it on “populist government.”

    Comment by iskraagent — August 5, 2012 @ 9:42 pm

  2. Ha ha, the left in India is a joke now. They have been reduced to smithereens in their power bastions – bengal and Kerala.

    Comment by clashni — August 6, 2012 @ 10:05 am

  3. Mr Clashni,
    I am a Leftist and we just don’t disappear. I just don’t like such remarks. First let me know who you are? Anti-Left?

    Comment by Vijaya Kumar Marla — August 6, 2012 @ 4:01 pm

  4. The “left” that has “disappeared” in India is the “left” that has implemented neoliberal policies while in government. Good riddance.

    Comment by Red Snapper — August 6, 2012 @ 10:09 pm

  5. I second the notion of V.K. Marla. What kind of degenerate ghoul takes delight in the political setbacks of the long suffering Indian toilers?

    Comment by Karl Friedrich — August 7, 2012 @ 12:47 am

  6. This post is good but I detest the term “Crony Capitalism”. It came into use as a barely shielded racist epithet hurled during the east Asian crisis and now lives to let mainstream liberals and conservatives talk about capitalism without, **gasp**, complaining about the “free market” system.

    Comment by Nathan Tankus — August 7, 2012 @ 6:37 am

  7. Ha ha, I am no degenerate Ghoul who despise the left but i am a soul who is concerned about their defeats and stupid political moves the official left, especially the CPIM is making today. I come from a traditional leftist family. My family has has made if not considerable but commendable contributions to spread leftist ideals in our ghastly unequal society. But, what is today’s left doing?

    Are they taking up any issues related to the masses today? This country is reeling with high inflation and corrupt practices, is CPIM or CPI able to conduct any struggles against this? There wanton destruction of environment in India, is the left making any credible statement on this regard? Instead, local leader in Kerala are writing articles about how to construct Dams in ecologically sensitive areas to generate power and bring “development” ? What happened in Singur and Nandigram (bengal)? The poor were forcefully driven out of their land for “industrialists” to set up factories? And what was the result? CPIM lost power in a state where they ruled for 30 odd years.

    What is CPIM in Kerala doing? They are conniving to oust a senior leader in the party who has better credentials and hold vast support among the masses? When there are serious issues grappling this nation, they are not protesting or taking up these issues but they seemed to be hell-bent ousting the octogenarian leader. Now is that what left is all about?

    With a terribly spineless leadership at the helm, the official left in India is soon declining in their clout. The official leadership supports corrupt state leaders who muddle in murder and other shady deals. There are about 160 CPIM members who are caught for various murder cases in kerala. A senior state leader is still in Jail because he was denied bail in a murder case.

    I can go on an on about the degeneration of the official leftist parties in India. I am seriously sad about this situation but that doesnt make me a rightist. Well, hardcore members of the leftist parties will brand me one, but truth always hurts.

    may be my outpouring may sound a bit childish and immature but it seems there are others too who think alike. Here is editorial from EPW, a respected Indian journal about the official Indian left (CPIM) –

    http://www.epw.in/editorials/cpim-trouble.html

    Left will survive in India but not for long as CPIM but as a broad cluster of left leaning parties, people and sorts.

    To top it all, CPIM recently supported their main opposition party’s candidate for the presidential election and this made the student wing of the party in Delhi’s Jawahar Lal University (JNU) submitting mass resignation. And JNU was considered a leftist bastion, where SFI (The student wing of CPIM) has won many elections.

    Comment by clash — August 9, 2012 @ 6:54 am

  8. It’s analogous to Ha Ha-ing the decimation of the Trade Unions here in the US that held significant political power for more than 30 years or Ha Ha-ing the collapse of the USSR which was around for 70.

    Albeit predictable — I just don’t find the ossification and slow defeat of nominally leftist bureaucracies anything to laugh about because it emiserates the working class and strengthens the exploiters.

    True enough, it opens up possibilities like an International OWS movement taking hold, but that silver lining does not evoke laughter.

    Comment by Karl Friedrich — August 9, 2012 @ 1:57 pm

  9. I know, this is no fun but very sad indeed.

    Comment by clash — August 9, 2012 @ 5:44 pm


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