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India needs to conserve energy: Shahi

December 07, 2002 16:02 IST

"India has not kept up with the rest of the world in terms of energy concern and this is a matter of grave concern," said R V Shahi, secretary, ministry of power, government of India.

He was speaking at the Energy Summit 2002, organised by the Confederation of Indian Industry (Southern Region) in Chennai recently.

He threw the ball into the consumers' and industries' court by saying: "Legislation is not an answer to the problem."

He said that out of the 550 billion units of electricity produced by the country, one third, that is more than 150 billion units of electricity, is lost due to power theft.

He, however, did not dwell on the initiatives that have been taken by various electricity boards, all under government control, to stop or curtail theft of electricity.

As the major chunk of the population in India -- more than 80,000 villages -- is denied power, it is the duty of those who consume electricity to think about how to conserve power and make it available to the have-nots, he observed.

"It is time for introspection. Twenty three per cent of electricity can be saved if we use properly, without affecting quality," said he.

Some of the reasons cited by the Secretary for consumers not conserving energy are 'lack of awareness, not pricing power properly and not manufacturing efficient gadgets.'

On the proposed Central Electricity Regulatory Commission, he said, it would fix tariffs for central government utilities and other utilities which supply power to more than one state.

Generation and distribution of electricity being a concurrent subject, 'unlike TRAI, we have to set up Electricity Regulatory commission at both state level and central level. The state level regulatory commission will take care of the state level power projects, transmission projects, IPPs and retail consumer tariff.'

Regarding private participation in power distribution, he was hopeful that the private companies 'would examine reform initiatives taken by various electricity boards and state governments, and based on their reform agenda, they will decide on investment. If they develop confidence because of the reform agenda, private companies will make up their mind. Those states which show that they can turn around faster, definitely will attract private investment because this is a sector where demand is there.'

Shahi was optimistic about the Tamil Nadu Electricity Board 'turning around commercially faster than many other state electricity boards.'

But K N Shenoy, past president, CII and former chairman, ABB India Ltd, in his keynote address, squarely blamed the government for not reforming the power sector enough.

He was of the view that the reforms in the energy sector have not kept pace with the needs of a globalised economy as Indian economy is bogged down by a number of policy level issues.

According to him, "Power reform is a national issue, a national problem which we need to resolve with public-private partnership."

According to Shenoy, if India were to achieve the target of 8 per cent growth rate during the 10th Plan period, the country has to shift its focus to the manufacturing sector. The contribution of the manufacturing industry to the GDP is an abysmal 26 per cent, while in China, it is 50 per cent of its GDP, 40 per cent in Thailand, and 33 per cent in the Philippines.

The manufacturing industry can contribute more than the 26 per cent that it is doing now, only if the manufacturing costs are reduced drastically. For that, the industry has to improve its cost structure, efficiency, productivity, quality and reliability so that the products are internationally competitive.

What adds to the increasing cost of the manufacturing sector is the cost of energy especially in the cement, aluminium, pulp and paper, and foundry industries.

The energy input in these sectors varies from 25 per cent to 65 per cent of the total manufacturing cost, while in the other sectors, energy cost varies from 3 per cent to 15 per cent.

The average industrial power cost in India is Rs 4.18/kWh as compared to Rs 1.8 in the US, Rs 1.2 in China, RsĀ  0.8 in Saudi Arabia, Rs 2.0 in Thailand and Rs 1.7 in most European countries.

Naturally, one of the major concerns of the Indian manufacturing industry is the rising power tariff as there has been a three fold increase in power tariffs in the last ten years.

Shenoy said, "Energy conservation therefore, assumes centre stage in our battle to drastically reduce manufacturing costs. I would very strongly urge the Indian corporates to adopt technology as an enabler for energy conservation."

Shobha Warrier in Chennai