'Power shortage in TN caused by bureaucratic failure'

S Kabilan, a retired Indian Administrative Service officer, was chairman of the Tamil Nadu Electricity Regulatory Commission from 2007 to 2012.

An engineering graduate from IIT, Madras, Kabilan joined the IAS in 1973 and retired as the chief secretary of Assam.

In this interview to rediff.com’s Shobha Warrier, he talks about what he could do as the chairman of TNERC and what ails the power sector in Tamil Nadu.

From a state that had surplus power a decade ago, Tamil Nadu has become a state that has 14-15 hours of power cut...

The shortage is to the tune of 4,000 megawatts. This has come about in years, and did not happen overnight.

Why didn't anyone see this coming?

One reason for this is the poor finances of the TNEB. That has led to poor investment in power projects. That again is because of the lack of revision of tariffs. After 2003, the first revision happened in July 2010 and then in March, 2012.

But is it not because of political compulsions that power tariffs were not revised?          

Yes, you could say that.  The 2012 revision was substantial which gave the TNEB about Rs 9,000 crore but even now, the finances of TNEB is in poor shape.

Is distribution loss a main reason for the poor financial condition of TNEB?

As far as distribution loss is concerned, Tamil Nadu is one of the better performing states with only 18 percent compared to 23-25 percent of some other states. Distribution loss is not the main reason.

Is theft a reason?

Theft is not a big reason in Tamil Nadu compared to the north. Theft is detected and fined here. TNEB has been very effective in fining heavily.

What about complaints of corruption?

These are all endemic in any government system. It has not made a significant difference to the overall shortage.

Tamil Nadu is one state that gives free un-metered electricity to agriculture. How much has it impacted the sector?

We had estimated that Rs 5,000 crore went out as power subsidy. Fortunately, over the years, the subsidy compensation has been improving. Now, it is Rs 2,500 crore as against what it was earlier. It is a gradual improvement.

We, at TNERC were the first to point this out in our report to the government that the huge gap between the actual subsidy and estimated subsidy was impacting the finances of TNEB. So, there has been improvement over the years.

Another criticism is that while many industries were given nod, there was no effort to add more generating stations. Is it also one of the reasons for the gap between demand and supply?

Yes, it is true. The demand-supply gap was not addressed by the TNEB.

What about the role of the politicians and bureaucrats?

I would say no politician ever stopped adding capacity. It is entirely bureaucratic failure. The TNEB and the energy department also have a role in this failure.

As the chairman of the TNERC, what was your role? Could you do anything positive to tide over the shortage?

We do not directly get into administration. It is not the TNERC's business to get into day to day administration. It is entirely the responsibility of the TNEB, and it is Tamil Nadu Generation and Distribution Corporation Ltd and Tamil Nadu Transmission Corporation Ltd to initiate the projects. We only periodically conduct reviews of the projects.

Could you not make any suggestions?

Certainly, we review and then make suggestions on how they should add capacity to the electricity board. 

One big advantage of Tamil Nadu is, it has 50 percent of the country's wind capacity to generate power of about 11,000 MW.

The TNEB said that the main reason for this year's shortage was because of lack of wind.

I will not accept that explanation because TNEB had never encouraged wind power generation. There is a default of payment of 14 months to the wind power generators. Same is the case with thermal generators also.

Even the major revision in March 2012 could not raise the finances of TNEB which continues to be in doldrums.

As the chairman of TNERC, did you have no role in helping TNEB to tide over such a situation?

It is not the business of TNERC to directly get into the day to day matters of TNEB. Our role is only to monitor periodically the power projects of TNEB and other private power projects which constitute only 1,000 MW. There was not much scope for the private sector to play.

In Tamil Nadu, the shortage of power has affected the industry very badly...

Compared to Andhra Pradesh which was in shortage of 18 percent, Karnataka has 12 percent, Kerala has 5 percent, Tamil Nadu had 24 percent shortage of power till December 2012. Of course, Tamil Nadu is the most industrialised of all and Kerala, the least.

In Tamil Nadu, industrial growth has been affected very badly. It has crippled particularly the moffusil industries because they face much longer power cuts.

So, it is bound to have political implications also...

Certainly because the textile industries in Coimbatore, Madurai are bitter; complaining of acute shortage. Then again, shifting base is not very easy.  Probably, they will have to live with the shortage for another two years.

Do you feel the power sector is badly in need of reforms to tide over the crisis?

Yes. In fact, we had made recommendations to the government in 2010 that distribution, generation and transmission should be separated. Right now, distribution and generation are treated as one and transmission, separate. Generation should always be separate so that TNEB and governments can effectively monitor projects.

We also recommended that each one should be headed by a separate chairman.

We also recommended that there should be five autonomous distribution companies in Madurai, Trichy, Vellore, Thanjavur, etc and not just one in Chennai.

What kind of advantage do you see in having five different distribution companies?

That will give them enormous opportunity to consumer grievance redressal. If you decentralise and form autonomous corporations with separate chairman for all the five centres, there is enormous distribution advantage.

What was the response of the government when you submitted the report?

The report is still pending with the government. Perhaps they are still examining it. It takes time for the government to accept proposals. So, it is inevitable that changes will come slow.

How much changes would it have made if these proposals were implemented two years ago?

Definitely, it would have made considerable progress in the effective redressal of consumer grievances.

If generation is separated as a company, it would have given TNEB a good balance sheet for generation alone because then, it will help them borrow finances.

That is one reform that should be accepted by the government very quickly.

Should a state like Tamil Nadu turn to renewable energy like solar power?

Solar power is expensive because the panel and other infrastructure are expensive. You need huge expanse of land. Yes, the rate has come down from Rs 14 a unit to Rs 9 but even then, it is costly compared to other modes of purchase. When the scale of production improves, it may come down to Rs. 5-6.

Photograph: Sreeram Selvaraj