15 years back power sector witnessed a huge expansion. Between 2005 and 2011, thermal projects with 700 GW were given either TOR or EC by the government in around 570 projects, with estimated investments of Rs. 35 trillion.
15 years later, the realisation of those projects are less than 50%, leaving a large number of them stranded assets, or partially built, with banks not recovering the loans and power sector contributing to some 40% of the stranded assets.
In most of the cases land has been acquired and hence people are displaced, their livelihood snatched, irreversible damage done to environment and either the projects did not take off or the ones who took off are staring at an uncertain future.
The latest example is the Tata Mundra. This was the first project among the 16 UMPP the government announced in 2006. This project, as other UMPPs, was 4GW capacity, and is on the coast of Gulf of Kutch.
The Rs. 200 bn project got financing from World Bank’s private sector bank, IFC, ADB, PNB Paribas, Korean ExIm bank and 7 national banks.
Thousands of fisherpeople, whose livelihood was destroyed because of drenching and discharge of effluence and hot water from the thermal plant, was not even counted as affected communities, let alone compensated.
The mangroves were razed, the habitat of tortoise and lobsters were destroyed and the intake channels increased the salinity of the land, making traditional agriculture impossible now.
The project ran half the capacity most of its 7 year life, with less demand by the states and higher prices of imported coal, than they estimated in 2007.
7 years later, last week the company wrote to Ministry of Power that by February end they would stop operating the project because it’s economically non-viable.
Government will be forced to take over this loss making project and pump taxpayers money into it to make it floating, with nearly no demand for electricity.
It’s another story that people fought this project tooth and nail, and dragged IFC to US courts for financing a project which destroyed their livelihood and when IFC waved the card of immunity to them, they challenged it, went upto the Supreme Court of US and won a historical victory where the Court said that international organisations like World Bank do not enjoy absolute immunity, opening way for communities around the world to hold WB legally accountable for the damages they are creating.
Only another UMPP took off – the Reliance owned, US ExIm bank financed, Sasan project in Madhya Pradesh. It’s running in great loses and it will only be a matter of time that the company will throw their hands up, leaving the govt to take it over.
Something as similar is happening in the RE now, since the past few years.
The aggressive and mindless expansion of RE, as similar to the expansion of thermal power in mid 2000s, is seen now.
If it was UMPP in thermal, it is UMSPP in RE. We are incapable of thinking anything which are not ultra and mega.
Thousands of hectares of land is being acquired, or leased, dispossessing people of their livelihood, and in many cases, taking away the commons.
The sharp fall of prices of solar power, while it is welcome on one hand, has upset the financial calculation of bankers, that banks like SBI do not want to fund new projects which are below Rs.3/unit. It’s the PE funds which were investing in solar heavily and even that has plateaued the past two years.
Because of the fall of prices, DISCOMs are defaulting the RE companies heavily, to a tune of Rs. 97 bn, with Rs. 65 bn in just three states of AP, TN and TL.
The commitment India made to Paris agreement was 175 GW of RE by 2020. Last September our Honble Prime Minister went to UN and announced 450 GW of RE by 2022, receiving a lot of applause.
In reality, we just managed 65 GW of RE so far. Optimists estimate that we may reach 100 GW by 2022. That is far from 450 GW the Prime Minister announced with a great deal of fanfare and he is sure that by 2022 people would have forgotten all what he said about this and would be fighting another crisis engineered by this government. There will be many more between now and 2022 for sure!!
Playing to the gallery again, the Honble Prime Minister has announced the Global Electricity Grid plan, to evacuate RE to neighbouring countries, expect Pakistan of course.
Nepal is building hydropower projects to export power to India. Bhutan is self reliant in power. Sri Lanka, technically is more expensive to evacuate power. Leaving poor Bangladesh as the only possible consumer for our power. We are helping build Rampal thermal projects there, PM’s friend Adani’s Godda thermal project in Jharkhand is aiming to export power to Bangladesh. After all that, we also want to export the RE to them. How much power will we feed that country, whose total peak demand is less than 15 GW.
All indices point to the fact that industrial usage of power is at its lowest. Economy is at a tipping point of recession. We do not have takers for the power which is produced now, that around 60% of projects are either running well below capacity, or are shutting down.
India is an energy surplus country with 344 GW generation capacity and our peak demand around 170 GW. Despite this, we have nearly 20% of population still not connected to the grid. While that number may look small, for a 1.3 bn population, 20% of that is more than the total population of some of European countries.
There are some pertinent questions we need to ask:
- With no demand and no markets to export, why are we producing power?
- How long will the poor, in whose name all projects are justified, have to wait to get steady, reliable and quality power?
- Is the power/energy issue that of a technology – if we fix thermal with RE will it address the core iniquity and injustice issues?
- Who will be held accountable for the mindless decisions, investments and the damages caused to people, environment and economy?