Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 150
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Code Context


        trigger_error($message, E_USER_DEPRECATED);

    }
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 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php.'
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deprecationWarning - CORE/src/Core/functions.php, line 311
Cake\Http\ServerRequest::offsetGet() - CORE/src/Http/ServerRequest.php, line 2421
App\Controller\ArtileDetailController::index() - APP/Controller/ArtileDetailController.php, line 150
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Cake\Http\ActionDispatcher::_invoke() - CORE/src/Http/ActionDispatcher.php, line 120
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Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
Cake\Error\Middleware\ErrorHandlerMiddleware::__invoke() - CORE/src/Error/Middleware/ErrorHandlerMiddleware.php, line 96
Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
Cake\Http\Runner::run() - CORE/src/Http/Runner.php, line 51
Cake\Http\Server::run() - CORE/src/Http/Server.php, line 98

Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 151
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Code Context


        trigger_error($message, E_USER_DEPRECATED);

    }
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 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php.'
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deprecationWarning - CORE/src/Core/functions.php, line 311
Cake\Http\ServerRequest::offsetGet() - CORE/src/Http/ServerRequest.php, line 2421
App\Controller\ArtileDetailController::index() - APP/Controller/ArtileDetailController.php, line 151
Cake\Controller\Controller::invokeAction() - CORE/src/Controller/Controller.php, line 610
Cake\Http\ActionDispatcher::_invoke() - CORE/src/Http/ActionDispatcher.php, line 120
Cake\Http\ActionDispatcher::dispatch() - CORE/src/Http/ActionDispatcher.php, line 94
Cake\Http\BaseApplication::__invoke() - CORE/src/Http/BaseApplication.php, line 235
Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
Cake\Routing\Middleware\RoutingMiddleware::__invoke() - CORE/src/Routing/Middleware/RoutingMiddleware.php, line 162
Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
Cake\Routing\Middleware\AssetMiddleware::__invoke() - CORE/src/Routing/Middleware/AssetMiddleware.php, line 97
Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
Cake\Error\Middleware\ErrorHandlerMiddleware::__invoke() - CORE/src/Error/Middleware/ErrorHandlerMiddleware.php, line 96
Cake\Http\Runner::__invoke() - CORE/src/Http/Runner.php, line 65
Cake\Http\Runner::run() - CORE/src/Http/Runner.php, line 51
Cake\Http\Server::run() - CORE/src/Http/Server.php, line 98

Warning (512): Unable to emit headers. Headers sent in file=/home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php line=853 [CORE/src/Http/ResponseEmitter.php, line 48]
Code Context
            if (Configure::read('debug')) {

                trigger_error($message, E_USER_WARNING);

            } else {
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        LATEST NEWS UPDATES | Reforms, competition in distribution and end to coal monopoly only antidotes to power failures-Arvind Panagariya    </title>
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-The Economic Times





The power failure in India on July 30-31 was big news in US media. When the radio and TV stations began calling with the question whether this spelt the end to India's claims to global-power status, my first..."/>
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-The Economic Times





The power failure in India on July 30-31 was big news in US media. When the radio and TV stations began calling with the question whether this spelt the end to India's claims to global-power status, my first..." />
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    <h1 class="cat-box-title">Reforms, competition in distribution and end to coal monopoly only antidotes to power failures-Arvind Panagariya</h1>
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                            <div style="text-align: justify">-The Economic Times</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The power failure in India on July 30-31 was big news in US media. When the radio and TV stations began calling with the question whether this spelt the end to India's claims to global-power status, my first reaction was to remind them that a similar failure of the grid in 2003 had drowned the entire Northeast and Midwest in the US and Ontario in Canada into darkness.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">But, alas, the similarity between the failures in North America and India ended there. In the US, ageing equipment and poor management by local distribution companies result in outages that can sometimes last for days. But residential and industrial customers can generally count on regular flow of electricity.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">In my 38 years in the country, not once have I experienced scheduled power cuts. Nor do most customers maintain backup generators. Except when a storm knocks down power lines, electricity flows continuously at a steady voltage.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">In contrast, the blackout in India is but one manifestation of fundamental weaknesses in the electricity sector. As per 2011 census, one-third of Indian households still do not use electricity.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The vast majority of the remaining two-thirds are subject to planned power cuts. And those able to afford financially-costly and environmentally-damaging backup systems maintain them. Industry either pays high tariffs or relies on even costlier captive generation of its own.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">It did not have to be this way. Electricity reform had gathered momentum under the National Democratic Alliance (NDA) government. Had that been maintained, considerable respite would have come, just as has been the case in telecommunications.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">But whereas telecommunications reform was completed during the NDA tenure, at its exit in 2004, electricity reform remained work-in-progress. Unfortunately, the successor United Progressive Alliance (UPA) government turned indifferent towards the reform.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Until 1975, electricity sector was a vertically-integrated monopoly in each state, with the state electricity board (SEB) managing all three components of electricity supply: generation, transmission and distribution.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Electricity generation was opened to the central government in 1975 and to private operators, both domestic and foreign, in 1991. While centrally-owned National Thermal Power Corporation (NTPC) soon emerged as a major player in generation, the private sector was slow to oblige.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">SEBs had monopoly over distribution and were, therefore, the sole buyers of electricity. But since they were also financially bankrupt due to years of losses, potential private entrants into generation did not see them as credible buyers, as is illustrated by the sordid episode of Enron.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The reforms initiated in the late 1990s sought to introduce transparency by unbundling the SEBs into three separate companies entrusted with generation, transmission and distribution.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">A central objective of subsequent reforms, initiated through the landmark Electricity Act of 2003, was to restore the financial health of distribution companies, which could serve as credible buyers of electricity.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">To this end, the Act provided for several measures. They included possible privatisation of state distribution company and licence to additional distribution companies in any given area.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Large customers were to be given open access to the distribution grid so that they could buy electricity from the seller of their choice. Each state was to also appoint an independent State Electricity Regulatory Commission (SERC) empowered to set the electricity price.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Cross-subsidy from commercial buyers to households was to be ended in a time-bound fashion. To cut losses, the Act provided for metering of all customers, made stealing electricity a criminal offence and required regular energy audits with the view to cut losses.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Unfortunately, these reforms have been implemented sporadically. In most states, regulators are ex-bureaucrats with little independence and, under political pressure, set tariffs at levels too low to cover the costs of distribution companies.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Periodic announcements of free electricity to farmers by politicians add to the latter's losses. Saddled with gigantic losses, distribution companies are unable to buy enough electricity despite high customer demand. That inability led NTPC to reduce its capacity utilisation to 85% in 2011-12 from 92% in 2010-11.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The recent outage resulted in large measure from this mismatch of demand and supply. To combat water shortage due to failure of rains, farmers began to overwork electric pumps to draw groundwater, pulling more electricity than their distribution companies had planned for. With the government lacking the nerve to chop off the extra demand, grid failure was the result.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Adding to these woes is India's coal policy that hampers electricity generation. As a part of her socialist agenda, Prime Minister Indira Gandhi nationalised coal mines, establishing the monopoly of Coal India over all coal mining in 1975.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">India has over 13% of proven coal reserves worldwide and, yet, Coal India fails to adequately supply coal to power plants, forcing some to import it from Australia and Indonesia. In one case, at a 660-MW unit set up by CLP Holdings of Hong Kong, production was delayed by months because Coal India could not keep its commitments.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">If India is to bring uninterrupted electricity supply 24 hours a day and seven days a week to all its citizens, including the one-third who still rely on other energy sources tolight their houses, there is no alternative to reforms.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Distribution companies must be turned into commercial entities subject to usual market pressures and the governmentmonopoly on coal mines must be ended.&nbsp;</div>                                                           
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    <br><a href="http://economictimes.indiatimes.com/opinion/comments-analysis/reforms-competition-in-distribution-and-end-to-coal-monopoly-only-antidotes-to-power-failures/article" class="re" target="_blank">The Economic Times, 22 August, 2012, http://economictimes.indiatimes.com/opinion/comments-analysis/reforms-competition-in-distribution-and-end-to-coal-monopoly-only-antidotes-to-power-failures/article</a><div class="clear"></div>
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    <h1 class="cat-box-title">Reforms, competition in distribution and end to coal monopoly only antidotes to power failures-Arvind Panagariya</h1>
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                            <div style="text-align: justify">-The Economic Times</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The power failure in India on July 30-31 was big news in US media. When the radio and TV stations began calling with the question whether this spelt the end to India's claims to global-power status, my first reaction was to remind them that a similar failure of the grid in 2003 had drowned the entire Northeast and Midwest in the US and Ontario in Canada into darkness.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">But, alas, the similarity between the failures in North America and India ended there. In the US, ageing equipment and poor management by local distribution companies result in outages that can sometimes last for days. But residential and industrial customers can generally count on regular flow of electricity.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">In my 38 years in the country, not once have I experienced scheduled power cuts. Nor do most customers maintain backup generators. Except when a storm knocks down power lines, electricity flows continuously at a steady voltage.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">In contrast, the blackout in India is but one manifestation of fundamental weaknesses in the electricity sector. As per 2011 census, one-third of Indian households still do not use electricity.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The vast majority of the remaining two-thirds are subject to planned power cuts. And those able to afford financially-costly and environmentally-damaging backup systems maintain them. Industry either pays high tariffs or relies on even costlier captive generation of its own.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">It did not have to be this way. Electricity reform had gathered momentum under the National Democratic Alliance (NDA) government. Had that been maintained, considerable respite would have come, just as has been the case in telecommunications.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">But whereas telecommunications reform was completed during the NDA tenure, at its exit in 2004, electricity reform remained work-in-progress. Unfortunately, the successor United Progressive Alliance (UPA) government turned indifferent towards the reform.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Until 1975, electricity sector was a vertically-integrated monopoly in each state, with the state electricity board (SEB) managing all three components of electricity supply: generation, transmission and distribution.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Electricity generation was opened to the central government in 1975 and to private operators, both domestic and foreign, in 1991. While centrally-owned National Thermal Power Corporation (NTPC) soon emerged as a major player in generation, the private sector was slow to oblige.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">SEBs had monopoly over distribution and were, therefore, the sole buyers of electricity. But since they were also financially bankrupt due to years of losses, potential private entrants into generation did not see them as credible buyers, as is illustrated by the sordid episode of Enron.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The reforms initiated in the late 1990s sought to introduce transparency by unbundling the SEBs into three separate companies entrusted with generation, transmission and distribution.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">A central objective of subsequent reforms, initiated through the landmark Electricity Act of 2003, was to restore the financial health of distribution companies, which could serve as credible buyers of electricity.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">To this end, the Act provided for several measures. They included possible privatisation of state distribution company and licence to additional distribution companies in any given area.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Large customers were to be given open access to the distribution grid so that they could buy electricity from the seller of their choice. Each state was to also appoint an independent State Electricity Regulatory Commission (SERC) empowered to set the electricity price.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Cross-subsidy from commercial buyers to households was to be ended in a time-bound fashion. To cut losses, the Act provided for metering of all customers, made stealing electricity a criminal offence and required regular energy audits with the view to cut losses.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Unfortunately, these reforms have been implemented sporadically. In most states, regulators are ex-bureaucrats with little independence and, under political pressure, set tariffs at levels too low to cover the costs of distribution companies.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Periodic announcements of free electricity to farmers by politicians add to the latter's losses. Saddled with gigantic losses, distribution companies are unable to buy enough electricity despite high customer demand. That inability led NTPC to reduce its capacity utilisation to 85% in 2011-12 from 92% in 2010-11.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The recent outage resulted in large measure from this mismatch of demand and supply. To combat water shortage due to failure of rains, farmers began to overwork electric pumps to draw groundwater, pulling more electricity than their distribution companies had planned for. With the government lacking the nerve to chop off the extra demand, grid failure was the result.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Adding to these woes is India's coal policy that hampers electricity generation. As a part of her socialist agenda, Prime Minister Indira Gandhi nationalised coal mines, establishing the monopoly of Coal India over all coal mining in 1975.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">India has over 13% of proven coal reserves worldwide and, yet, Coal India fails to adequately supply coal to power plants, forcing some to import it from Australia and Indonesia. In one case, at a 660-MW unit set up by CLP Holdings of Hong Kong, production was delayed by months because Coal India could not keep its commitments.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">If India is to bring uninterrupted electricity supply 24 hours a day and seven days a week to all its citizens, including the one-third who still rely on other energy sources tolight their houses, there is no alternative to reforms.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Distribution companies must be turned into commercial entities subject to usual market pressures and the governmentmonopoly on coal mines must be ended.&nbsp;</div>                                                           
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    <br><a href="http://economictimes.indiatimes.com/opinion/comments-analysis/reforms-competition-in-distribution-and-end-to-coal-monopoly-only-antidotes-to-power-failures/article" class="re" target="_blank">The Economic Times, 22 August, 2012, http://economictimes.indiatimes.com/opinion/comments-analysis/reforms-competition-in-distribution-and-end-to-coal-monopoly-only-antidotes-to-power-failures/article</a><div class="clear"></div>
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}
$reasonPhrase = 'OK'
header - [internal], line ??
Cake\Http\ResponseEmitter::emitStatusLine() - CORE/src/Http/ResponseEmitter.php, line 148
Cake\Http\ResponseEmitter::emit() - CORE/src/Http/ResponseEmitter.php, line 54
Cake\Http\Server::emit() - CORE/src/Http/Server.php, line 141
[main] - ROOT/webroot/index.php, line 39

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Code Context
                    $value

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    <h1 class="cat-box-title">Reforms, competition in distribution and end to coal monopoly only antidotes to power failures-Arvind Panagariya</h1>
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		 Published on</span><span class="text-date"> Aug 22, 2012</span>
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                            <div style="text-align: justify">-The Economic Times</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The power failure in India on July 30-31 was big news in US media. When the radio and TV stations began calling with the question whether this spelt the end to India's claims to global-power status, my first reaction was to remind them that a similar failure of the grid in 2003 had drowned the entire Northeast and Midwest in the US and Ontario in Canada into darkness.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">But, alas, the similarity between the failures in North America and India ended there. In the US, ageing equipment and poor management by local distribution companies result in outages that can sometimes last for days. But residential and industrial customers can generally count on regular flow of electricity.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">In my 38 years in the country, not once have I experienced scheduled power cuts. Nor do most customers maintain backup generators. Except when a storm knocks down power lines, electricity flows continuously at a steady voltage.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">In contrast, the blackout in India is but one manifestation of fundamental weaknesses in the electricity sector. As per 2011 census, one-third of Indian households still do not use electricity.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The vast majority of the remaining two-thirds are subject to planned power cuts. And those able to afford financially-costly and environmentally-damaging backup systems maintain them. Industry either pays high tariffs or relies on even costlier captive generation of its own.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">It did not have to be this way. Electricity reform had gathered momentum under the National Democratic Alliance (NDA) government. Had that been maintained, considerable respite would have come, just as has been the case in telecommunications.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">But whereas telecommunications reform was completed during the NDA tenure, at its exit in 2004, electricity reform remained work-in-progress. Unfortunately, the successor United Progressive Alliance (UPA) government turned indifferent towards the reform.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Until 1975, electricity sector was a vertically-integrated monopoly in each state, with the state electricity board (SEB) managing all three components of electricity supply: generation, transmission and distribution.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Electricity generation was opened to the central government in 1975 and to private operators, both domestic and foreign, in 1991. While centrally-owned National Thermal Power Corporation (NTPC) soon emerged as a major player in generation, the private sector was slow to oblige.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">SEBs had monopoly over distribution and were, therefore, the sole buyers of electricity. But since they were also financially bankrupt due to years of losses, potential private entrants into generation did not see them as credible buyers, as is illustrated by the sordid episode of Enron.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The reforms initiated in the late 1990s sought to introduce transparency by unbundling the SEBs into three separate companies entrusted with generation, transmission and distribution.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">A central objective of subsequent reforms, initiated through the landmark Electricity Act of 2003, was to restore the financial health of distribution companies, which could serve as credible buyers of electricity.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">To this end, the Act provided for several measures. They included possible privatisation of state distribution company and licence to additional distribution companies in any given area.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Large customers were to be given open access to the distribution grid so that they could buy electricity from the seller of their choice. Each state was to also appoint an independent State Electricity Regulatory Commission (SERC) empowered to set the electricity price.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Cross-subsidy from commercial buyers to households was to be ended in a time-bound fashion. To cut losses, the Act provided for metering of all customers, made stealing electricity a criminal offence and required regular energy audits with the view to cut losses.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Unfortunately, these reforms have been implemented sporadically. In most states, regulators are ex-bureaucrats with little independence and, under political pressure, set tariffs at levels too low to cover the costs of distribution companies.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Periodic announcements of free electricity to farmers by politicians add to the latter's losses. Saddled with gigantic losses, distribution companies are unable to buy enough electricity despite high customer demand. That inability led NTPC to reduce its capacity utilisation to 85% in 2011-12 from 92% in 2010-11.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">The recent outage resulted in large measure from this mismatch of demand and supply. To combat water shortage due to failure of rains, farmers began to overwork electric pumps to draw groundwater, pulling more electricity than their distribution companies had planned for. With the government lacking the nerve to chop off the extra demand, grid failure was the result.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Adding to these woes is India's coal policy that hampers electricity generation. As a part of her socialist agenda, Prime Minister Indira Gandhi nationalised coal mines, establishing the monopoly of Coal India over all coal mining in 1975.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">India has over 13% of proven coal reserves worldwide and, yet, Coal India fails to adequately supply coal to power plants, forcing some to import it from Australia and Indonesia. In one case, at a 660-MW unit set up by CLP Holdings of Hong Kong, production was delayed by months because Coal India could not keep its commitments.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">If India is to bring uninterrupted electricity supply 24 hours a day and seven days a week to all its citizens, including the one-third who still rely on other energy sources tolight their houses, there is no alternative to reforms.</div><div style="text-align: justify"><br /></div><div style="text-align: justify">Distribution companies must be turned into commercial entities subject to usual market pressures and the governmentmonopoly on coal mines must be ended.&nbsp;</div>                                                           
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    <br><a href="http://economictimes.indiatimes.com/opinion/comments-analysis/reforms-competition-in-distribution-and-end-to-coal-monopoly-only-antidotes-to-power-failures/article" class="re" target="_blank">The Economic Times, 22 August, 2012, http://economictimes.indiatimes.com/opinion/comments-analysis/reforms-competition-in-distribution-and-end-to-coal-monopoly-only-antidotes-to-power-failures/article</a><div class="clear"></div>
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Reforms, competition in distribution and end to coal monopoly only antidotes to power failures-Arvind Panagariya

Published on Aug 22, 2012   Modified on Aug 22, 2012

-The Economic Times The power failure in India on July 30-31 was big news in US media. When the radio and TV stations began calling with the question whether this spelt the end to India's claims to global-power status, my first reaction was to remind them that a similar failure of the grid in 2003 had drowned the entire Northeast and Midwest in the US and Ontario in Canada into darkness. But, alas, the similarity between the failures in North America and India ended there. In the US, ageing equipment and poor management by local distribution companies result in outages that can sometimes last for days. But residential and industrial customers can generally count on regular flow of electricity. In my 38 years in the country, not once have I experienced scheduled power cuts. Nor do most customers maintain backup generators. Except when a storm knocks down power lines, electricity flows continuously at a steady voltage. In contrast, the blackout in India is but one manifestation of fundamental weaknesses in the electricity sector. As per 2011 census, one-third of Indian households still do not use electricity. The vast majority of the remaining two-thirds are subject to planned power cuts. And those able to afford financially-costly and environmentally-damaging backup systems maintain them. Industry either pays high tariffs or relies on even costlier captive generation of its own. It did not have to be this way. Electricity reform had gathered momentum under the National Democratic Alliance (NDA) government. Had that been maintained, considerable respite would have come, just as has been the case in telecommunications. But whereas telecommunications reform was completed during the NDA tenure, at its exit in 2004, electricity reform remained work-in-progress. Unfortunately, the successor United Progressive Alliance (UPA) government turned indifferent towards the reform. Until 1975, electricity sector was a vertically-integrated monopoly in each state, with the state electricity board (SEB) managing all three components of electricity supply: generation, transmission and distribution. Electricity generation was opened to the central government in 1975 and to private operators, both domestic and foreign, in 1991. While centrally-owned National Thermal Power Corporation (NTPC) soon emerged as a major player in generation, the private sector was slow to oblige. SEBs had monopoly over distribution and were, therefore, the sole buyers of electricity. But since they were also financially bankrupt due to years of losses, potential private entrants into generation did not see them as credible buyers, as is illustrated by the sordid episode of Enron. The reforms initiated in the late 1990s sought to introduce transparency by unbundling the SEBs into three separate companies entrusted with generation, transmission and distribution. A central objective of subsequent reforms, initiated through the landmark Electricity Act of 2003, was to restore the financial health of distribution companies, which could serve as credible buyers of electricity. To this end, the Act provided for several measures. They included possible privatisation of state distribution company and licence to additional distribution companies in any given area. Large customers were to be given open access to the distribution grid so that they could buy electricity from the seller of their choice. Each state was to also appoint an independent State Electricity Regulatory Commission (SERC) empowered to set the electricity price. Cross-subsidy from commercial buyers to households was to be ended in a time-bound fashion. To cut losses, the Act provided for metering of all customers, made stealing electricity a criminal offence and required regular energy audits with the view to cut losses. Unfortunately, these reforms have been implemented sporadically. In most states, regulators are ex-bureaucrats with little independence and, under political pressure, set tariffs at levels too low to cover the costs of distribution companies. Periodic announcements of free electricity to farmers by politicians add to the latter's losses. Saddled with gigantic losses, distribution companies are unable to buy enough electricity despite high customer demand. That inability led NTPC to reduce its capacity utilisation to 85% in 2011-12 from 92% in 2010-11. The recent outage resulted in large measure from this mismatch of demand and supply. To combat water shortage due to failure of rains, farmers began to overwork electric pumps to draw groundwater, pulling more electricity than their distribution companies had planned for. With the government lacking the nerve to chop off the extra demand, grid failure was the result. Adding to these woes is India's coal policy that hampers electricity generation. As a part of her socialist agenda, Prime Minister Indira Gandhi nationalised coal mines, establishing the monopoly of Coal India over all coal mining in 1975. India has over 13% of proven coal reserves worldwide and, yet, Coal India fails to adequately supply coal to power plants, forcing some to import it from Australia and Indonesia. In one case, at a 660-MW unit set up by CLP Holdings of Hong Kong, production was delayed by months because Coal India could not keep its commitments. If India is to bring uninterrupted electricity supply 24 hours a day and seven days a week to all its citizens, including the one-third who still rely on other energy sources tolight their houses, there is no alternative to reforms. Distribution companies must be turned into commercial entities subject to usual market pressures and the governmentmonopoly on coal mines must be ended.

The Economic Times, 22 August, 2012, http://economictimes.indiatimes.com/opinion/comments-analysis/reforms-competition-in-distribution-and-end-to-coal-monopoly-only-antidotes-to-power-failures/article

Tagged with: electricity

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