Even though the opportunity is excellent for investment in the power sector, private players are reluctant to come.
Power has to be an economic activity, not mired in corruption, bureaucracy and subsidies — for Maharashtra to find light at the end of the tunnel, says Akbar Jung
Even though the opportunity is excellent for investment in the power sector, private players are reluctant to come. That is because the person who invests, wants a good return. But the private player faces major problems which are not in his control.
For instance, when he approaches the bankers for capital, he will be asked to show the balance sheet of the utility he is investing in. The balance sheets of these companies will not be financially viable if the transmission and distribution losses are high. The bankers are bound to say they won’t risk their money on utilities whose transformers, wires, conductors and equipment are old and non-functional.
This, when combined with the theft of power, often in connivance with the staff working in the utilities, is hurting the consumer now because the problem of shortage of power has escalated in Maharashtra.
We are in a situation which is a trap, and now is the time for our politicians to plan and get out of it.
Another problem is when the investor goes for procuring water, land and environmental clearances for his project. Ministers begin exhibiting their vested interests. Instead of facilitating the processes, they begin putting hindrances in the way of the investor, in order to extract pay-offs before the pre-requisites are in place.
The investor is also prepared for this problem when he wants to invest in any South Asian country, as the cuts are part of the system.
But then comes the bureaucracy which begins playing by the rule book, and more obstacles are put in the path of the investor. So finally for a 1,200-2,000MW project, the investor spends half a million dollars and then returns empty-handed.
The good part is that our courts are pro-active, but they are time-consuming which deters the investor from taking legal recourse.
If power is produced at Rs2.20 per unit and sold at 40-50p, and yet the lines are not put up, or power transmitted through the poles that have been placed and forgotten for years, then how can you expect investment? Power is supposed to be an economic activity, and that is something our politicians need to realise. In Maharahstra, the main problem was that with the Dabhol project coming, your government did not go for procuring or generating more power. Moreover, the government declared subsidies in power. Populist politics has cost your state.
Jung was special secretary in the Union Ministry of Power. He spoke to Neeta Kolhatkar
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