Collective measures along with a strong grid discipline could avert incidences of grid failure, says Ashok Khurana, Director General, Association of Power Producers (APP), in an interaction with Pradeep Pandey.What was your observation in the recent power grid failure?From my experience, I can tell you that grid failures are always complex occurrences, and pin-pointing the basic reasons for the failure is not very straight forward.From recent analysis, it appears that the recent grid failure is a clear example of a combination of various factors. Firstly, there has been considerable over-drawal by certain states over the past few days. However, I must clarify that over-drawal by itself does not cause grid failures. Only if the over-drawal is timed when the grid is already running on low frequencies, does the grid collapse. In this extant case, there does not appear to be any evidence of any alarming drop in grid frequencies.Preliminary investigation has revealed that this grid failure has been caused by the overloading and tripping of two arterial transmission lines (the Bina – Gwalior – Agra) on two consecutive days. We understand that these lines were overloaded due to the outage of the second circuit for a few days for Upgradation. This seems to have resulted in a cascading effect, which did not give enough time for generating stations to back out or to isolate regions.While this is a regrettable event, and has resulted in a loss of several thousands of crores to the nation, it also gives us valuable lessons in grid discipline and management.Do you believe that this situation could have been averted if there has been a proper vigilance by the transmission system managers?I would say it could have been averted with a better coordination among the concerned states, load dispatch centres and the central transmission utility.It is being widely reported and discussed that power sector needs immediate policy reforms and proper implementation. The incident may trigger prompt reform in the sector. What is your view?I agree. Policy reform in the power sector is long overdue. The last wave of reforms was in the 2003 – 06 period, and we are reaping the benefits of this now, in terms of increased private sector participation and unprecedented power capacity growth.Yet, there are major issues facing the power sector, biggest of which are fuel shortages. We should now invest all our time and energy in building a robust regulatory framework that can last us for the next 30 years.Do you believe with this that our policy makers will expedite the reforms?I am confident that this will spur the decision makers to ensure.However, all such policy measures take time. Until then, the constituents of the grid have to cooperate on all aspects of grid discipline in a constructive manner and ensure that grid does not fail. Lack of coordination and safety actions can lead to grid failure.How will you prioritise the issues pertaining to power sector reform?If asked to name three top issues with the power sector, I would say – Fuel, Fuel and Fuel. Arranging fuel and resolving the pricing issues associated with imported fuel based power plants should be the kept on top because these are keeping almost 30,000 MW of power capacity under-utilized. Even fulfilling the requirements of stranded power capacity can make India self sufficient in power for the next few years. All the focus of the policy makers should be in this direction, and I am happy to note that while the progress has been slow, it has been steady.As a nation, we cannot afford such large power capacities being stranded, at a time when you have huge power shortages, blackouts, people not getting power for hours all together and at the same time you have generating assets which is not allowed to fire due to lack of fuel.In the past one year overseas regulatory reforms on mining and coal export have created a difficult market for Indian power producer, depending on imported coal. Many companies are also saying at that if government do not allow them to pass over the additional cost to the consumers, their projects will be unviable. What is your opinion?As of today, we have a choice of no power or expensive power.Also people who are not getting power are using diesel generators. When they can pay Rs 12.5 rupees a unit cost of power no reason why they cannot buy power generated imported fuel, which can easily be made viable for the developer at a fourth of the cost.In all these things what is required is segmentation of consumers. I fully agree there is a great part of our population which will not be able to afford power if it is sold by buying fuel at market rates. So, we need to have clear segmentation of tariff based on the ability of the customer to pay.If a certain category or this segment of population cannot afford market fuel determined power, you have concessional power, linkages; you have old NTPC plants that have already paid their fixed cost. We can ask to reserve that power for that vulnerable section of society. For the rest of aspirational India, there is enough ability to pay, and enough power capacity waiting to fulfil their requirements.How is this different from current cross subsidy?The model of cross subsidy being adopted presently is not optimal, and is frankly quite wasteful. Those who do not need power are cross subsidised. As on today my power may be coming for subsidised by somebody and I can afford it and I am clear about it, people who are burning 4 ac's in their houses are running subsidised power. As a former civil servant with over 30 years in public service, I have learnt that we must always strive that the subsidy reaches the deserving sections of the society, with minimum spillages.Do you think the present crisis is all together hints towards energy governance failure?There are many factors connected with it. Generation has to be geared up by public sector and state sector. If generation has to be geared up then there will extensive fuel shortage. So, it is all a vicious circle. In that entire value chain it is the money coming from retail distribution that supports the entire power sector. As long as that chain from where all revenues to be generated remain weak and the system is financially bankrupt, how can you sustain that?Thus, the first point which has to do is make distribution utilities obtain financially viable. As of today the accumulated losses of Discoms is over two lakh crore rupees. That is a huge amount. So it shows either there is A) the tariffs are not cost reflective and B) there is theft in the system. The commercial loss is nothing but a euphemism for theft. What is required is improvement at the distribution level.Gujarat has set an example, I believe if it can be done by one state why it cannot be done by others. Gujarat gives 24 hours power a day and none of them are bankrupt.What would be your comment on current CAG report on coal issue?I have not yet seen CAG report in detail but limited to power sector I do not understand how the loss has been calculated if the coal was not traded.Firstly, these blocks were not in Coal India's plan till the end of 13th plan period, were located at extremely inaccessible places, and had extensive logistics costs associated. Private Sector, with its enterprise, has made this coal happen. Even today there are several blocks (almost 60) which are not getting operational due to reasons beyond their control, and these blocks have been issued show-cause notices. The development of such difficult coal blocks indicates the entrepreneurship of the private sector, and not windfall gain.Secondly, the coal being mined from these mines is not 'tradable' and is captive to a particular project for power production. If coal is being converted to power and being sold at a competitive price (on transparent competitive bidding), where is the loss?Even after more than 5-6 years since these coal mines allocated to private companies, a few of them were developed, while most of them are still lying idle. What are the main reasons for delay?It is environmental clearances. If you give me a mine there is no reason I will hold a mine when I can produce power. There are many people whose power projects have come up they are running in heavy losses and their mines have not been cleared as yet. They have come in no go areas and for more than two years they are hanging. Coal India unfortunately our bureaucratic process for approval and clearances is so tedious and so cumbersome it takes 5-6 years for getting required clearances. Luckily, CAG has recommended for single window clearances.In my view, CAG has made lot of sensible observations in the report, and we should take up these recommendations for the betterment of the sector and move forward, instead of trying to point fingers at past decisions.It must be borne in mind that re-consideration of past decisions is an extremely disturbing trend, and foreign investors and lenders always shy away from countries which indulge in retrospective laws/policy changes. In the interest of the investment climate of the country, we need to learn our lessons and move on with life.
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