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We need to professionalize our decision making, H S Brahma, Former Secretary, Ministry of Power

30 Aug 2012

H.S. Brahma, presently Election Commissioner of India, is a retired I.A.S. officer from Andhra Pradesh and has held significant assignments in different sectors in the Union Government. One of his most important stints was as Secretary in the Ministry of Power during May 2009 to April 2010. In a candid interview with Infraline Plus Alok Sharma and Neeraj Dhankher, Brahma shares his views on the current situation in the power sector and also suggests solutions to improve the situation. The following are the excerpts:

What, according to you, are the reasons behind the power crisis being faced in the country?

One of the major problems that we face today due to which we are not able to move forward on power generation is sheer lack of coordination. We are not working as a team. The power ministry, along with other stakeholders like power generators, producers and Coal India Limited (CIL) and Ministry of Environment and Forests, all should move as a team. There should also be a close coordination among them. Today, we have a situation where everyone is trying to do his area of activity but the collective effort seems to be not yielding results. We have around two lakh megawatt (MW) capacity, but are not able to even use the entire capacity fully due to lack of coal and other roadblocks.

In addition, the thought process has to be clear before taking a decision. There should be clear cut discussion on all aspects concerning a project before it is put up for construction or bidding. All aspects should be discussed threadbare, rather than adopting a laid back attitude and acting only after the problem has arisen. We should also work towards building up stock of coal, whether imported or domestic.

What problems did you face when you were the power secretary?

At that time, the problem was not as acute as today. We had strong coordination with the PMO, ministries as well as the Cabinet Secretariat. We adopted a proactive approach and did not wait for problem to rise or recur, we used to meet regularly.

Companies feel that today, there is no sanctity of contract in India. What are your views?

If one signs a contract and a word have been given, it should be duty and endeavor of the government or individual to abide by it. If there are doubts over the sanctity of contracts in India, then we will not be able to do business in this country. It will create major moral and ethical and business problems in future. This needs to be avoided at all cost.

What, as per you, is the reason that we have lagged behind China when it comes to planning our energy security?

India does not have any shortage of brains, planning or expertise. We have vision. Only thing we are lacking is that we are not able to measure up to that standard. Once decision is taken, it should be the endeavor of every party – builder or supplier – to abide by that decision. Today, we need firm decision making in the country. Once a decision is taken, there should not be any mid-way discussions, doubts or confusion. A generator/contractor should either do his job or get out. We cannot afford to go slow in the power sector. The future is largely dependent on how we harness, generate and supply power to our millions or consumers, citizens and entrepreneurs.

How does CIL improve its coal production? What is stopping CIL in aggressive pursuit of international coal blocks?

Coal sector should have an aggressive policy and should go for high tech mining sector as in USA, South Africa, Australia and Canada. It is time they should mechanise coal fields, extraction and management, rather than employ huge manpower, which is not showing adequate results.

We have limitation of CIL. When private companies can buy assets in Australia and South Africa, why can’t a PSU, which is fully backed by the government and has all the resources to do the same? The problem here is that in a PSU, the decision making process is too slow. We need to professionalize our decision making if we have to move forward very quickly to close the gaps.

How important do you think is technological upgradation today considering that boilers being used in power plants are not designed to use more than 10-15% of higher grade imported coal?

The boilers manufactured by BHEL do not have the capacity to bear very high thermal heat, but only inferior quality of coal could be used. Imported coal, being higher on quality, has a higher calorific value. Indian boilers do not have the capacity to absorb that much of heat. It is imperative that we should endeavour for technological upgradation for boilers so as to use multiple types of coal. Indian coal is not enough; we have to depend on imported coal having high thermal efficiency in future.

Imported coal has the problem of escalating the cost of production. But the higher cost is not allowed to be passed on to the consumer. What, according to you, are the suggestions?

One solution is dual pricing. For example, out of 100 units of power sold at open market price, a company should be forced or imposed to sell say 20 units in state grid at agreed terms and conditions, so as to maintain some sort of equity.

No power is costlier than no power at all. Choice is to the consumer. The time has come when we have to realize that coal or gas is not going to come free. Even if a company sells power at open market price, those who can buy it should be allowed to buy at higher cost. Let people have a choice. Market has to play a major role.

The government is planning to come out with a formal policy on the usage of surplus coal produced in mines allocated for captive use to companies. How feasible is the ideal of allowing companies to sell surplus coal?

A company willing to sell surplus coal should only be allowed to sell it to CIL. Coal is a national asset. Hence, it should only be sold to CIL at a negotiated price. A company should not be allowed to make profit out of selling it. The basic intention while allocating coal block (at nominal price) was to generate power. So if a company has produced more because of better technology and manpower, then it should sell it on the basis of a negotiated agreement on cost plus basis. The profit should not be so huge to the extent that a power generator switches his business model from power generator to a coal supplier.

How use of power can be minimized?

Energy efficiency is the key. There should be a standard threshold level for every equipment beyond which it should not be allowed to operate. If machine cannot perform by using that much of input, then it should be discarded and not allowed to produce.

Today, we import almost 80% of our crude oil requirements. In such a scenario, we have no future unless we opt for high energy efficiency. We have already missed the bus by about 35 years, and now cannot afford to delay the process anymore. Energy efficiency is an area which should be taken more seriously at every level.

We should develop independent labs at national and state level to test all equipment for energy efficiency. We require good dissemination of information and national resolve.

Our expenditure on R&D is less than 2% of the total outlay, while it is close to 6-8% in other developed countries. Importation is not the solution. In every area, efficiency is a must. We have no option but to go for energy efficiency in every sphere either in domestic, industrial or agriculture.

(InfralineEnergy thanks H S Brahma, Former Power Secretary for sharing his valuable insights with our readers. The column 'In-Conversation', is a platform to engage experts from various sectors to share their views on the different transformations happening in the Indian energy sector.)