7Energy
P.P. Pillai
1.0. Introduction
The energy sector of Kerala still remains almost unexplored and undocumented even after more than half a decade of planning and development of this vital sector. This is in spite of the fact that a major chunk of the plan allocation, about 23.67 percent of the total plan outlay, right from the first plan through the ninth plan, was used for the development of this sector. This means that the importance and the significant role of energy in development were well understood and recognized by our policy makers. However, the development in this sector remained slow, inadequate and mostly erratic.
2.0. Piecemeal Approach
The demand-supply imbalance in the energy sector in Kerala is neither well articulated nor seriously considered in the planning process by the Government for want of proper understanding of the energy sector. In fact, for most majority of the people and the Government, even today the energy sector in Kerala is nothing but the electricity sector under the management and control of the Kerala State Electricity Board (KSEB). Therefore, energy planning and development in Kerala is largely confined to the production and distribution of electricity by the KSEB. This is not to deny the recent and ad hoc efforts of the Government in promoting energy production from other sources like bio-mass, biogas, solar, wind, and so on. But the progress made in this direction is negligible, compared to the vast potential of these sources.Unfortunately, Kerala is not endowed with other important forms of commercial energy sources like coal, oil or natural gas. But these forms of commercial energy are consumed abundantly in the economy and their demand is on the increase. Similarly, the consumption of non-commercial forms of energy, like firewood, agricultural waste, animal waste, etc., in the state's economy is believed to form more than 45 percent of total energy consumption. None of these aspects concerned with the demand side of energy sector is seriously considered or dealt with in energy planning in the state. This is not surprising because there has been no planning for 'energy' production and consumption in the state, but only planning for 'electricity' production and distribution by the State Electricity Board.
3.0. Why Weak Database?
This very narrow approach to energy planning followed in the state, naturally does not require any exhaustive database, other than production and consumption statistics of electricity by the KSEB, for energy planning in the State. There is no co-ordinated planning at present in the state for other forms of energy. This is a very serious issue overlooked in our energy planning. The State is believed to be one of the states with the highest annual growth of automobiles in the country, demanding huge quantity of diesel and petrol every year. Not only that, any shortage in power supply by the State Electricity Board, which is common now, is overcome by the consumers by using individual diesel generating sets that consume large quantity of diesel. The growth of consumption of industrial and cooking gas in the state is also considerably high and this has not found any place in our energy planning exercise in the state. Similarly, planning for firewood needed for household consumption or for industrial use has never been the concern of our planners. In sum, energy planning in the state remains partial and incomplete, having no holistic approach. With the result, there is no holistic 'Energy Policy' for the State, except the programmes for the Electricity Board, covered in various Five Year Plans. Even the 'Kerala Power Policy' document brought out by the State Government in 1998 lacks a holistic vision and approach in its power policy.
4.0. The Untapped Potential
We should acknowledge the fact that energy is not synonymous with electricity, though electricity is an important and significant component of energy. When we discuss the data requirements for the planning and development of the energy sector of Kerala, at least in this late hour, we should look at the energy sector as a whole and not just confine our concern to electricity production and distribution by the State Electricity Board alone. The pre-occupation with electricity in energy planning is not that we question here, but the total neglect of planning for other forms of energy, which are in abundant use in the economy and the consumption of which also needs to be considered in the planning of energy sector. It is necessary to understand the relative places of different forms of energy in the energy system, their consumption, relative prices, substitutability, cost of production, production and supply constraints etc., while planning for energy in an economy, and also to fix the place of electricity in the proper perspective. In fact, one of the basic reasons for the perpetual power sector crisis being experienced in Kerala is this lack of understanding.
The sun is really the fountainhead of the entire energy system in this world. This energy from the sun is classified into two different forms, intensive energy and non-intensive energy. All conventional energy forms like solar energy, wind energy, tidal energy, geothermal energy, oceo-thermal energy etc., are examples of non-intensive forms and all of them are renewable and commercial in nature. The hydropower, fossil fuels, nuclear power, wood, agricultural and animal waste etc., are intensive forms of energy. Of intensive energy forms, the hydropower is the only renewable as well as commercial form of energy. Fossil fuels and nuclear power are commercial forms but non-renewable. Wood, agricultural and animal wastes are renewable, but not commercial. Thus, except hydropower generated in the state, no other conventional commercial energy form is renewable. The importance, significance and advantage of hydro-electricity are this uniqueness.The other forms of renewable energy are wood and agricultural and animal waste. They are practically categorised as non-commercial, but their use is common and widespread in the state, particularly in the rural areas. Since fossil fuels like oil, coal, natural gas etc., and nuclear source are non-renewable sources, the production of electricity using these sources has to be planned subject to their sustainability. On the other hand, the so-called non-conventional energy sources (solar, wind, tidal, geo or oceo- thermal etc.) are renewable, but their use is just nominal even today in the country and almost zero in Kerala. The use of oil, a non-renewable energy form, mostly imported too, in the economy is as predominant as of electricity. The use of coal and natural gas for the production of electricity in the state is a very recent venture and the cost of production is exorbitant. Thermal power station came up only during 1997-99 with an installed capacity of 594 MW, forming about 25 percent of the total generating capacity in the state. The need, advantage and significance of electricity, particularly from hydro sources, in the state are thus well recognised and the thrust and priority given to it while planning for energy sector in the State is fully justified. However, it may also be recognised that the production and pricing of electricity, without regard to the prices of other forms of energy, their availability or supply and their substitutability is unscientific. The time is already too late, therefore, to have a holistic approach to energy planning in the State, taking the whole energy system, and not just electricity generated by KSEB or other agencies, to address the power crisis in the State.
Both the demand and supply sides of energy are equally important in planning for development. But so far, by and large, no serious consideration has been given to the demand side in energy planning, particularly in the context of ever increasing demand for oil and the demand for non-commercial energy forms for cooking and other purposes in the rural areas. The power sector planning in the state has been based on All India Power Survey, conducted by the Central Electricity Authority periodically and the demand projections in these reports, based on all-India norms have never been found realistic as far as Kerala is concerned, simply because the demand pattern in Kerala has been different from that of the country.
An 'Energy Policy', delineating the relative use, importance, advantages, scope, demand and supply of different forms of energy in Kerala and the strategy of energy development, indicating the optimum mix of different forms of energy to meet the demand is already over due. The entire outlook, approach and perspective of KSEB and the power engineers have to change and plan for the development of the energy sector, treating it as one system, not for the development of electricity alone, however, important it is. We should search for the data required to follow such a holistic approach in energy planning and development in the state and examine the availability, adequacy, accuracy and reliability of existing data. An exhaustive search is impossible here due to two constraints, time and access to all available data within short period. The presentation here is subject to this limitation.
5.0. Studies on the Energy Sector
Energy has never been a subject of serious studies by economists either in India or elsewhere till the mid-twentieth century. Though energy was known to be an input in any production process, no economists made any explicit reference to it in the discussions on factors of production. This was because energy was not conceived and seen as a constraint in the production process. It was, perhaps, Chenery who tried for the first time to introduce energy as an explicit factor in the neo-classical production function analysis. There was, of course, some concern about the depletion of forest supplies of firewood in England in the thirteenth century (Earl Cook, 1977). Energy remained as a neglected sector by development economists and statisticians. Nobody took any interest in energy statistics or studies on energy.
The work of the Club of Rome, done by the Massachusetts Institute of Technology (MIT) and reported in 'The Limits to Growth" (1972), however, gave a strong warning to the world about the possible threat from the fast exhausting natural resources, including energy, particularly non-renewable energy sources. This made the nations and the development economists alert about the energy sources and their use for economic development. However, energy sector attracted very serious attention of all the nations in the world only by the early 1970s, with the first oil crisis in 1973. In fact, even in Kerala, the installed capacity of electricity generation, which stood at 621.5 MW till early seventies, was raised to 1011.5 MW by 1976-77, though it remained at the same level for another one decade till 1985-86. In India too, the energy sector became a priority area research and development in the 1970s. Prior to that, research in this area was carried out extensively. A host of studies, however, were attempted in India during the past two and a half decades, by various institutions and individual researchers.
The interest in energy studies, viewed at the national level, unfortunately, was not seen in Kerala. Electricity remained as a subject of concern only for the Government and the KSEB for long time and therefore, planning and development in the sector went on in a routine manner. Neither academics nor other professionals outside the Government or KSEB showed much interest in or contributed to the planning and development process of this sector. In fact electricity was not considered as a problem area in Kerala till early eighties as the State was then believed to be a surplus state in electricity. The Government, the KSEB and the people were proud of the electricity surplus in the state, without realizing that it was so just because the per capita consumption of electricity in the state was extremely poor, one of the lowest in the country (109.4 kwh. per year in 1980-81). Surprisingly, however, the state had to face massive power shortage during the eighties leading to severe power cut in the state.
The power shortage experienced in the eighties and the consequences of the two oil shocks in 1973 and 1979 opened the eyes of the people, Government, KSEB, professionals and academics, NGOs such as the Kerala Sastra Sahitya Parishad (KSSP), and others. Issues in the power sector began to be studied and discussed outside the Government and the KSEB, providing additional inputs, at least in a limited way, for planning and development of the power sector. However, even today, the energy/power sector of Kerala is not in the priority area of studies and research by academics or development economists in the state and therefore, available studies in this area are very few. The two earliest attempts by academicians to study the power sector in Kerala were, perhaps, those of Mathew (1977) and Pillai(1977). While the Government, KSEB and the people remained complacent with the power surplus position of the state during the seventies, the study by Pillai exploded the electricity surplus myth and gave signal about the then imminent power shortage, if remedial actions were not taken by the Government. In fact, some of the employees associations of KSEB also had warned the Government during this period about the possible power shortage. Electricity demand projections for Kerala were attempted by Pillai (1981,1984), indicating the urgent need for enhancing the production capacity suitably to overcome future power shortage. Few other studies by different researchers also came up during the eighties and nineties, as cited in the reference section. The three latest available studies are from the Centre for Development Studies by Vijayamohanan Pillai (1999), Kannan and Vijayamohanan Pillai (2000) and Santhakumar and Achin Chakrabarthy (2000). They have examined the reliability of the power generation system, the efficiency of SEBs, including KSEB and the environmental implications of hydel projects respectively.
The most unfortunate aspect of power sector decisions in the state, as in other decision-making by the Government, the findings or suggestions in any of these studies done by academics or professionals outside the Government circle are never taken seriously by the policy makers. The political- bureaucratic nexus makes the policy decisions and the professionals inside the system are also having only marginal role. The best example is the recent policy decisions in the power sector in general, and particularly, those being taken on tariffs. It is unfortunate that the government is pre-occupied for some time now with upward revisions of tariffs at regular intervals to meet the cost of electricity supply. How long will they continue in raising the tariffs to meet the cost of rampant inefficiency in production and distribution of electricity? Neither the Government nor the KSEB are ready to totally restructure the working of the Board to ensure efficiency in its business. No amount of window dressing to satisfy some outside donors in the name of reforms will help in achieving efficiency in power supply in Kerala. Concerted and genuine efforts are necessary for analysing and understanding the deep-rooted problems of inefficiency in the KSEB business through in-depth serious research and studies. The decisions in the energy/power sector need to be taken on the basis of findings of scientific studies and not on ad-hoc notes from the bureaucrats or officers of the Board with vested interests to perpetuate the inefficiency, enabling them to fish in the muddled water. The decisions should not be left to the Ministers or Ministerial Committees, as are done at present, who generally go by political considerations rather than scientific rationale.
The energy/power sector in Kerala has reached a stage of utter confusion and chaos, causing unbearable hardships to the people. Perhaps, this is the one sector, the policies of which affect the entire economy and the entire people of the state. And this is one sector where the policies in the past, because of obvious reasons, were taken only on political considerations and vested interests, leaving aside the scientific principles. Even the appointments of chairman and the members of the Board have not been exceptions to this. There is not even a single professional economist or statistician in this biggest public undertaking in the state, either in the management body or among the officials. In such a situation, it is the duty and responsibility of professionals and academic researcher to engage themselves in detailed and serious scientific studies on the energy sector of Kerala. This is an essential need of the time, not only educate the people about the malice being inflicted on them due to the unscientific approaches of the Government and the Board and to react to and resent strongly the irrational decisions of the authorities in this most vital sector, but also to make the Government and the KSEB to adopt rational policies, at least under the currently ongoing reform process. The currently available data system is thoroughly inadequate for detailed studies in this area. This is briefly indicated in the rest of the paper.
6.0. Data Availability and Requirements
The only data available on energy sector in the state are those published by the KSEB on electricity in its four annual publications, Power System Statistics, Administration Report, Statement of Accounts and System Operations. These are regular publications that present data, though with one or two years lag, on power generation, transmission and distribution at the aggregate level in the state. Apart from these regular publications, there are some ad-hoc reports, a few of which are listed in the 'reference', that give data on some aspects of KSEB's working . The regular publications provide data on power station-wise monthly generation of electricity, loss in transmission and distribution at the system level, category-wise number of consumers, consumption and average revenue, technical data on number of transformers, length of transmission and distribution lines, and so on , all at the state level. These data enable us to understand the overall growth of installed capacity, electricity generation and category-wise consumption over the period at the state level. The trend in the line losses at the system level, the monthly fluctuations in generations in various hydel stations, the average revenue realised from the sale of electricity to different categories of consumers, analysis of interruptions in power supply at the aggregate level and on some selected EHT feeders, analysis using operational details of generating stations etc are possible with these data base. Also, the overall financial position of the KSEB can be studied using the data in the Statement of Accounts. However, these published data at the state level do not enable one to examine in detail the various forms of inefficiencies and lapses in decision-making. For example, the circumstances and reasons for shutting down many of the generating units in different power stations very often are important to know for an efficiency study. Again, the from the Statement of Accounts, one cannot make out the loss due to cost over runs because of the undue delay in the execution of projects, because no project-wise cost data are published. Similarly for in-depth study for the determination tariffs, cross-subsidies, cost of production and distribution at various stages and cost effectiveness or least cost production decision, these published data are insufficient.One most important drawback of the published data is the non-availability of data at the disaggregate level, at the district/block/panchayat levels, necessary for decentralised planning for energy. This is all the more important when we look at all forms of energy as a whole, and plan for energy for the rural area, both commercial and non-commercial. Data, though are not published now, are said to be available at the Divisions, Sub-Divisions and other lower level offices of the KSEB that would enable one to attempt disaggregate level studies, necessary for identifying and locating specifically the inefficiency in the system. But in certain crucial areas, the KSEB does not have any information. For example, there is no data on distribution losses, feeder-wise or at different levels of distribution, which are required for understanding the causes of losses and to take remedial measures. Similarly, there are no cost data at disaggregate levels - power station-wise, substation-wise, or at various levels of distribution, which are necessary for studying the causes for the cost increase. Therefore disaggregate data are to be compiled and made available. In this computer age this is not a difficult task, if one wants to do it.
The greatest problem about the data for research and studies in this area is the lack of transparency in the working of KSEB and its decision- makings. In fact, if the proposed Electricity Regulatory Commission is instituted with persons of integrity and justice, the working of the KSEB is bound to be more transparent, particularly in the context of cost estimation and tariffs decisions. Naturally, the accessibility of data, now not available, would be easy. This may enable the researchers to study the sector more closely and suggest measures to make it efficient.
References
As pointed out earlier, the energy sector of Kerala is not just the electricity component alone, but is composed of all forms of energy being used in the economy in various productive activities. Studies to create awareness about the need for a holistic approach in energy planning and development are to be done on a priority basis. But the greatest handicap in this context is the lack of required data for the same. Data on all forms of energy are to be collected or estimated periodically with the help of surveys and published by some authority. The different agencies in the state dealing with energy in different forms should come together to provide data on energy, and not just data on electricity produced and supplied by KSEB. Emphasis needs to be given to the oil and has consumption statistics, firewood consumption statistics and other non- conventional energy statistics. It would be surprising to many to know that the KSEB does not have even to-day a Statistical or Economics Division, manned by any professional Statistician/Economist. The 'planning and statistics' work is handled by Engineers as if there is no need of expertise in economics or statistics for this job. This impression is very unfortunate.
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