A task for Modi Govt: To review UPA's faulty power policy

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The existing power crisis is only because the power stations are dismally low on their coal stocks and the discoms are unable to pay for power based on imported coal.
Prime Minister Narendra Modi during his electioneering never missed a chance to highlight how his government in Gujarat worked hard to ensure every household in his state gets 24X7 electricity supply. But, the Modi-led NDA dispensation so far has not revealed its plan to avert a national power crisis looming large.

As per reports, of the country's 100 thermal power stations, 56 have less than seven days of coal stocks, including 27 with supplies to last under four days, government data showed Wednesday. The country is staring at August 2012 grid failure like situation as nothing substantial seems to have been done so far. Almost half of the country went under utter darkness as the world witnessed one of the worst ever blackouts.

Why this problem?

The existing power crisis is only because the power stations are dismally low on their coal stocks and the discoms are unable to pay for power based on imported coal.

Scanty rains have also hit electricity generation through hydro power plants. This has put additional pressure on the thermal power generation.

People are reeling across west and north India are reeling under darkness due to long outages. Even bigger cities like NCR and Mumbai are also feeling the pinch of the power shortage. In the past few days, long outages in tens of corporate towers in Mumbai have hurt the operations while the national capital's suburbs in Gurgaon, Noida and Faridabad have also been left in the dark.

NTPC, India's largest power producer, is running its plants at over 80% capacity compared to an average of 62% in 2013, leading to higher demand for coal. As per NTPC chairman Arup Roy Choudhury, "If the country needs power, we have to increase generation and use whatever stock is available."

The main reason for the drop in coal stock because there is a disparity between regulated price at which power is sold and the cost of producing it, which is typically 20-30 percent higher.

Due to this, India's power sector is caught in a debt trap, rendering generators unable to scrape together the cash to buy fuel from Coal India, a state behemoth that successive governments have shied away from restructuring.

"We have a bizarre situation where there is demand for power from distributors without the ability to purchase. Generating capacity is stuck without a contract or the fuel," said Debasish Mishra, a senior director and energy expert at Deloitte told Reuters.

Its time Modi intervenes 

As per experts, Narendra Modi has the ability to tackle this problem since he faced a similar crisis in 2005 when he was chief minister of Gujarat.

Experts feel that Modi had assumed existing power company debts, freed the firms of populist pressures that kept power tariffs artificially low and clamped down on rampant electricity theft. This eventually helped Gujarat become a power surplus state.

But, the Centre has not taken any step to assure the that all is well and the country is not going to face most acute power crisis.

It is time Narendra Modi government reviews the "faulty power policy" of the UPA government at the earliest. He must keep his promise to make India a power surplus country and reviewing faulty policies will be the first step in this direction.

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