Energy at any cost

 
Published: Sunday 31 July 1994

In its cynical sense, the price of power is a phrase which often evokes rich imagery. Seen from any angle, the Indian government's decision to go in for what is going to be the world's largest, private sector electricity plant, to be constructed at Dabhol in Maharashtra by the US multinational corporation, Enron Corporation, offers only bleak visions.

From the point of view of money to be spent, the project immediately confirms the environmentalist assertion that intensive use of conventional forms of energy is exorbitantly expensive. To construct the 2,015 MW plant, Enron will spend nearly Rs 9,000 crore. To help it recover the investment, the Maharashtra State Electricity Board (MSEB) is committed to buy all the electricity produced by the plant, at rates unprecedented in India. The coal-based plants of the MSEB currently supply electricity for industrial use at 70 paise per unit. The rate for Enron will be nearly 4 times at much, to be paid in dollars. The irony is that gas-based technology, as is being brought in by Enron, generates electricity almost 20 per cent cheaper than coal. Moreover, the Union government is committed to make up for any shortfall on the part of the MSEB in payments to Enron. Eminent energy economists in India have estimated that the country will end up paying up anywhere between Rs 2,000-5,000 crore annually to Enron.

The protagonists of the project argue that such expenditure is justified in consideration of the natural gas based technology that Enron is bringing in. But there can be serious objections to the Enron project on these very grounds as well. First, other MNCs as well as the Indian private sector Bharat Heavy Electricals Ltd have claimed that they could have supplied the technology to be used at the plant much cheaper. In this light, it is significant that Enron has bagged the deal not through any competitive tender but a straightaway award of contract.

Second, India is looking for a range of advanced technologies to make her economy more efficient and that for efficient power generation is only one of them. Paying so heavily to Enron is certain to create problems for technology acquisition in other fields.

Third, the poor state of electricity supply is not exclusively the result of the existing state of technology in the country's power plants. Directly proportional to the distance over which it is supplied, 14-20 per cent of the electricity generated is lost due to the outdated transmission and distribution (T&D) technology. This is an area which desperately needs intensive, fresh investments for research and equipment. Despite realising that better T&D technology would obviously improve the availability of power in the country, governments, both at the Union and the states, claim that the required funds are unavailable. Only comical sense can be made of the fact that Enron will use the existing T&D facilities, even while it is to be paid for all the electricity its plant will generate.

This is not all. Officials of the Union power ministry reveal that at least 5 to 6 similar deals, with Enron and other US MNCs, are in the offing. Pushing them to an advanced stage was the most important agenda of the US energy secretary, Hazel O'Leary, who visited India last fortnight. The impact that such largescale import of gas-based power generation technology will have on the utilisation of other energy sources will be serious.

All the gas to be used by the Enron plant and others of its ilk will be imported. The diversion of several billions in foreign exchange to gas-based technology will inevitably cripple efforts to improve the efficiency of coal-based plants, which by far constitute the bulk of power generation plants in India. Coal is available in the country in such large quantities that it can suffice for almost 70 per cent of all projected power requirements for even the next century. Improving the efficiency of existing coal-based technologies, as well creating new means to use this resource, must be the focus of power planning in India.

It is already evident that the Enron deal has diverted attention elsewhere. Significantly, research teams working on Pressurised Fluidised Bed Combined Cycles for coal-based plants have always been handicapped by the poor availability of funding. This technology promises not only to drastically increase the efficiency of coal-based plants, but make them far less polluting as well.

On the last-named count as well, the Enron deal is murky. Both the company as well as officials of the Union Environment Ministry claim that detailed environmental impact assessments (EIAs) have been carried out. The former also explains the high cost of the project by asserting that it has made adequate safeguards on the basis of its study.

However, both the EIA's are not publicly available, contrary to Indian law. This has generated much speculation about the environmental hazards of the project in Dabhol and other parts of the Ratnagiri district, which has recently been in the news because of its successful public protests against other largescale industrial projects. Environmentalist criticism, therefore, is not the least of the controversies which are going to accompany the Enron project in the near future.

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