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Chapter 15:
ENERGY

The vital importance of energy, the growing problem's of eneigy supply and the possibilities ot inter-fuel substitution require thai the policy and plans for individual energy producing sectors should be part of an overall energy strategy. Energy is an essential input to all productive economic activity and the process of economic development inevitably demands increasingly higher 'evels of energy consumption.

THE ENERGY STRATEGY

15.1 The present per capita commercial energy consumption in India is only about a tenth of the global average reflecting the country's low level of income. While India, in common with many developing countries, consumes energy in a variety of forms ranging from electricity obtained from nuclear ifuels to agricultural waste and animal dung, the pattern of commercial energy consumption is characterised by a high degree of oil dependency, the share of oil products (measured in coal replacement terms) being close to fifty per cent. Just when the Indian economy had managed to adjust itself to the oil price increases of 1973-74, there has been a three-fold increase in oil prices in the last two years. Apart from the heavy strain this will cast on the country's balance of payments, even the physical availability uf oil in the international markets will pose a problem in the years to come. This means be hampered by inadequacies of energy supply, rethat if India's plans of economic growth are not to duced dependence on imported oil has to be a key element in our development strategy. The main elements of such a strategy are as follows:

1. accelerated exploitation of domestic conventional energy resources of, coal, hydro and nuclear power',
2. management of oil demand;
3. energy conservation;
4. exploitation of renewable sources of energy like energy forestry and bio-eas. specially to meet the energy requirements ol rural communities; and
5. intensification of research and development in emerging energy technologies.

The Energy sector of the Plan is geared to implement this basic strategy.

Pattern of Energy Consumption

15.2 The total commercial energy consumed increased five-fold during the last twenty-five years. Between 1953-54 and 1975-76, the annual growth rate in commercial energy consumption was 6.78 per cent as against the GDP growth rate of 3.68 per cent, the GDP—energy elasticity co-efficient has remained stable at around 1.8 and is high compared to developed countries. Fire wood, agricultural waste and animal dung (which are commonly referred to as non-commercial forms of energy) continue to contribute a substantial proportion of the total energy consumed in the country, though reliable data on the extent and pattern of their use are not available. Rough estimates indicate that between 40 and 45 per cent of the total energy consumed is still accounted for by non-commercial fuels.

15.3 The household sector in India is the largest consumer of energy accounting for about 50 per cent of the total energy consumption. Most of the energy used in this sector is in the form of noncommercial energy. Of the total of 5.7 lakh villages, about 2.5 lakh villages have been electrified. but the percentage of households electrified is about 14 per cent only. Only an estimated 5 million households use kerosene for cooking. Firewood, animal and vegetable waste constitute the cooking fuel in over 90 per cent of total households in the country. The share of agriculture in commercial energy consumption is still small (10 to 11 per cent), though it has increased rapidly during the iast decade. With an estimated 80 million work animals and 44 million plough shares, animal power still provides the overwhelming share of draught energy in agriculture.

15.4 The industries sector has the largest consumption of commercial energy (about 38.5 per cent). What is more, the intensity of energy use in this swtor has been rising sharply mainly on account of higher electricity consumption. The electricity consumed per rupee of value added went up sharply from 0.54 kwh in 1960-61 to 1.02 kwh in 1975-76. The relatively high proportion in the industry mix of power-intensive primary metal industries in the initial stages of industrialisation and substitution of other energy forms by electricity appear to have contributed to the high electricity intensity. Road and rail transport dominate the transport scene, accounting for as much as 95 per cent of the fuel-using transport. Of the two, the road system has expanded faster than the rail system in the last three decades. Air transport has registered an increase in the last fifteen years with an annual growth rate of about 10-11 per cent. On the other hand, there has been no strikine development in water transport, including coastal shipping. As for bullock carts, their number is estimated to have increased slightly from 12 million to 13 million during the sixties.

15.5 Viewed overall, the energy consumption pattern in India shows a high commercial energy-GDP elasticity caused partly by a steady substitution of non-commercial by commercial fuels. The bulk of commercial energy consumption is in the industry and transport sectors, while the domestic and the agriculture sectors continue to rely mostly on the so-called non-commercial fuels.

Energy Resources

15.6 The most important source of commercial energy in India is coal. The reserves of coal in seam"upto a depth of 600 metres and of thickness of 1.2 metres and above are estimated at 85,444 million tonnes, of which 24604 million tonnes are categorised as 'proved' reserves. Of the balance, 37585 million tonnes are 'indicated' reserves and the rest 'inferred' reserves. The bulk of the coal reserves are cf the non-coking variety (67,533 million tonnes). In the context of the recent developments on the world energy scene, the possibilities of mining at greater depths and from thinner seams are coming up for consideration. A quick inventory shows that there could be possible additional reserves of 26,184 million tonnes of coal in seams between 600 and 1200 metres depth and thickness of 0.5 to 1.2 metres.

15.7 As on 1st January. 1980, the balance of net recoverable reserves of oil in the 'definite' category was about 360 million tonnes and of gas about 350 billion cu-metres. Prognostic studies indicate a bright picture regarding the balance potential. But such estimates, it should be remembered, are based on a multiolicitv of variables and imponderables and are, as such, subject to wide fluctuations.

15.8 A systematic survey of India's hydro-electric potential undertaken in the fifties bv the Central Water and Power Commission assessed the totnl firm hydro-potential to bs equivalent to an annual generation of 216 Twh C41155MW at 60 per ceni'Ioad factor) A fresh survey has been inititated in 1976 by the Central Electricity Authority. The tentative results of the reassessment exercise, which is still incomplete, indicate that the total hydro-electric potential is equivalent to 75400 MW at 60 per cent load factor. The potential which has already been developed till the end of 1978 is 39.4 Twh or about 10 per cent of the total available potential. Besides, it is estimated that an annual energy gec-eration of about 25 Twh could be obtained economically through mini and micro hydels, canal drops and other possible low head development.

15.9 The reasonably assured uranium resources in India are placed at about 34000 tonnes of Ug Og of which about 15000 tonnes are considered economically exploitable at current international prices. The established uranium resources are estimated to be capable of supporting a first stage nuclear power programme consisting of natural uranium reactors of about 8000 MW of installed capacity. When thorium fuelled breeder reactors are constructed in the subsequent stages of the nuclear programme, the country could draw on an estimated 363,000 tonnes of thorium deposits (ThOs).

15.10 Large as the commercial energy resources of India appear, the reserves are small in per capita terms compared to many other countries. While India has reserves of 176 tonnes of coal per person, USA has 13488 tonnes, USSR 22066 tonnes and China 1168 tonnes. The balance of our proven reserves of oil are also very limited being only 0.55 tonnes per capita as against 34.83 tonnes in USSR, 16.32 tonnes in USA and 2.86 tonnes in China. As exploration proceeds, more reserves may no doubt be found, but the overall picture is unlikely to show any marked change.

Future Energy Demand

15.11 In spite of the uncertainties which affect the factors that determine future energy demand, there is need to make long term forecasts of such demand, as the long gestation of energy supply projects necessitates decisions to be taken far ahead of the materialisation of demand. The Working Group on Energy Policy estimated that if no deliberate measures were initiated to manage the demand, the energy requirement would register a fourfold increase within the next twenty years, it the economic growth rates were to be in the range of 5.5-6 per cent during this period. Even if measures were taken to increase the efficiency of fuel utilisation, reduce energy consumption by adopting more energy-efficient technologies and achieve desirable inter-fuel substitution, the energy demand by the turn of the century would be ncariv three times what it is at present. According to these projections, the requirements of coal, oil and electricity generation would be of the order of 426 million tonnes, 69 million tonnes and 464 Twh respectively in the year 2000.

15.12 Maintaining a reasonable balance between energy requirement and energy availability will it is apparent, pose a serious challenge in the coming decades. As stated earlier, it calls for a -oherent energy strategy which takes into account the country's own resource endowments, the degree to which tlie energy demand could itself be managed through more efficient utilisation of energy and the extent to which renewable energy technologies appropriate to Indian conditions could be inducted. Accelerated Exploitation of domestic energy resources

15.13 A faster exploitation of our domestic energy resources has clearly to be a basic element in our energy strategy. While several measures have been initiated in the last few years to accelerate exploration for oil and gas, there are still large areas, both on shore and off-shore, where the exploratory effort needs to be intensified. As oil prices rise, exploration of even relatively less promising areas becomes economic despite a higher discovery cost of oil. Equally, attention would have to be paid to a rapid development of proven hydro carbon reserves. India has had a long history of coal exploration and though a considerable amount of exploratory drilling remains to be carried out to upgrade and extend the reserves in many areas, the major thrust in the coal sector will have to be on increasing production. Coal being the only fossil fuel in which India is relatively well endowed, it is generally agreed that this would have to be the main source of commercial energy in the next few decades. There are, without doubt, formidable problems which stand in the way of large and sustained increase in coal production, but these would have to be faced.

15.14 Among the non-fossil conventional sources of energy, we have so far exploited only a small fraction of our substantial potential for hydro electric generation. As hydro power is both renewable and non-polluting, we must develop our hydel resources with a sense of urgency. The task is by no means easy: a substantial proportion of the potential yet to be exploited lies in the sub-Himalayan regions of northern and north-eastern India where the sites are not easilv accessible, the working seasons are limited and the geological conditions are difficult. Exploitation of the hydro-potential in some of the river valleys is dependent on satisfactory agreements being reached between the different riverine States Further, on account of the long gestation and higher initial capital cost, hvdro development also involves the problem of finding additional investment funds. Nevertheless, this programme has to be given a major push forward.

15.15 While the contribution of nuclear power to the total power generation has remained modest, the need to pursue further development of nuclear power with greater vigour is clearly established. There are regions of the country located far from the coalfields where establishment of coal based power stations will cast a heavy burden on the railway system for transporting' coal. Moreover, if the country is to exploit its abundant thorium reserves in future breeder reactors, we must develop a high degree ot self-reliance in nuclear power technology and constantly upgrade our scientific and manufacturing capabilities by maintaining an adequate tempo of construction of conventional nuclear reactors.

Management of Oil Demand

15.16 Though India's domestic oil production has gone up in the last twenty years, about sixty per cent of the requirements of crude oil and petroleum products are still being met through imports. As it is, over two thirds of the country's earnings of foreign exchange through merchandise exports have to be utilised for oil import. Unless we are able to strike new oilfields, there is little prospect of decreasing the country's dependence on imports. The demand management of petroleum products therefore assumes vital importance; the object would be to minimise the consumption of oil without hindering the growth of various sectors of the economy. This will require two-pronged action, namely, ensuring adequate availability of alternate sources of energy viz. coal and power, and more economic use of petroleum products in sectors where use of oil is unavoidable.

15.17 Since the transport sector is the largest consumer of petroleum products, a major issue is the steady increase in the share of road transport, which is less efficient than railways from the point of view of energy use. The long term transport policy would therefore have to provide for optimal use of scarce fuels. Within the railway system, the electrification of high density traffic trunk routes would have to be accelerated, as this would be beneficial from the point of view of both energy efficiency and conservation of oil. The consumption of oil as industrial fuel, fortunately, is not large in India. Even then, a concerted effort would have to be made to encourage substitution of oil by coal wherever technically feasible. This process could be accelerated through provision of appropriate financial and fiscal incentives and pricing policies. A rapid extension of the electricity system to the rural areas will also help in curbing growth of oil consumption; the use of diesel pumps could be minimised, while house-hold electrification could reduce the demand for kerosene to some extent.

15.18 Apart from these long-term measures, considerable savings could be achieved through improvement in the efficiency of use of oil products. For instance, it has been estimated bv experts in glass making that the average norm in India is four ton-nes of glass drawing per ton of furnace oil, as against seven to nine tons in the developed countries. Studies by the Petroleum Conservation Research Association (PCRA) indicate a savings potential of 12—13 per cent of furnace oil in the industrial sector. Similar possibilities exist in other sectors: to illustrate diagnostic studies conducted bv PCRA in twentv-four denots of various State Transport Undertakings revealed potential of at least 6 per cent saving bv better driving practices and better maintenance of vehicles. In the domestic sector kerosene stoves with a thermal efficiency of 55 to 60 per cent against the average efficiency of 35 to 40 per cent of a large variety of stoves now sold in the country have already been introduced in the market; supplies of such improved devices need lo be vastly stepped up.

Energy Conservation

15.19 It is not as if energy conservation is needed only in the use of oil. The cheapest form of alternative energy is energy saved. More attention will therefore have to be paid to the efficiency of energy generation and energy utilisation. It is well known that the proportion of energy consumed in the production and distribution of electricity is abnormally high in our power system. While the transmission and distribution losses in a country like India with a low load density are bound to be higher than in the highly industrialised countries where the loads are more concentrated, it should be possible to bring down the losses well below the current level of twenty per cent. There can also be no question that improvement in the capacity utilisation of existing generation equipment can be more cost effective than addition of new capacity. While it is true that power system load factors in India are already quite high, there is still some scope for increasing them through demand management.

15.20 The industrial sector, which consumes the largest proportion of commercial energy, must pay special attention to energy conservation. In many industries in India, the energy consumption per unit of output is distinctly higher than in other countries. It is possible that uneconomic unit size and obsolete technology contribute to higher energy consumption in some industries. Besides, low price of power and sheltered markets have fostered a climate in which the need for energy economy is not sufficiently appreciated. Measures have to be initiated for drawing up energy consumption norms for various kinds of fuel using equipment. Training programmes would have to be launched on a wide scale for the operating personnel in order to inculcate procedures and methods of achieving energy economy. For the small scale sector, assistance would have to be rendered to improve their designs and by providing test facilities. In evaluating new technologies, energy efficiency would hereafter have to be treated as one of the criteria. Simultaneously with offer of incentives for capital investment needed for achieving higher energy efficiency and the desired inter-fuel substitution, one should begin to move towards a package of regulatory measures tor energy audit with a view to penalise wasteful energy use.

15.21 Combined generation of electricity and process heat or 'co-generation' has to be encouraged in all industries where it is technically feasible, as this optimises energy utilisation. This is already being practised for instance, in the sugar industry, but there is scope in several other industries such as fertilizer, paper, etc. While in new industries facilities for co-generation should be insisted upon wherever it is appropriate, the grant of incentives for the capital investment which may be needed for installing such facilities in existing industries needs to be examined.

15.22 The scope for energy conservation is not confined only to the industrial sector. Earlier, we have seen how savings in the use of oil could be achieved in the transport and domestic sectors. Such possibilities exist even in the agricultural sector, studies of electric pump sets indicate that even though the design efficiencies of the pumps and the motor are not- unsatisfactory, mis-match between their capacity (i.e. of the pump and the motor) and wrong choice of suction and delivery pipes among others, result in low overall efficiency of the pump set installations on the ground. Here again, mechanisms would have to be developed to provide technical guidance to farmers and to ensure proper choice of equipment.

Pricing of Energy

15.23 In parallel with action on the technological front, an appropriate energy pricing policy would have to be followed in order to induce economies in the use of energy in all sectors and encourage the desired forms of inter-fuel substitution. In the past, the pricing of energy has not always reflected either the true costs to the economy or helped to ensure the financial viability of the energy industries. This situation cannot be allowed to continue for long. It is wrong to think that an adjustment in the prices of a basic input like energy would aggravate the inflationary situation; the costs to the economy are not reduced by not reflecting them in proper pricing. Indeed, the continuance of wrong pricing policies has a far more deleterious effect on the health of the economy than is often realised. Given the pressure 01 international oil prices and rising domestic energy costs, a high priority will have to be given early in the Plan period to the evolution of a structure of energy prices which reflects true costs, encourages economy in energy use and promotes replacement of scarce fuels.

New Energy Sources

15.24 As mentioned earlier, India's endowments iof energy resources are by no means large. There are also obvious limitations to the extent to wliich savings in energy consumption could be achieved through conservation. It is apparent, therefore, that if the country's growing demand of energy are to be met, new and renewable sources of energy must be developed. The new energy technologies are particularly suited for the introduction of decentralised or small scale energy supply systems which fit in with India's rural agricultural economy. Remote communities which cannot be reached by an electricity grid except at prohibitive cost or do not have easy access to conventional commercial fuels could, through renewable energy technologies, be provided wirn energy sources ror domestic use as well as tor rural industry and agriculture. In general, these technologies have the additional merit of having less adverse impact on the environment than the conventional fossil fuel systems. Even though the immediate contribution of the new energy technologies to energy supply may be limited and many o'f them are not economically competitive at the moment, there is no doubt that they will play a predominent role in future.

Animal and human energy

15.25 The heavy dependence of the rural economy on inputs of animal and human energy has already been stated. This situation is bound to continue for several decades to come. The main effort would have to be to reduce the drudgery of life in villages by developing devices, e.g., pedal operated mechanisms, which are more productive aad less tiring than hand operated ones. Only some stray efforts have been made so far in t'-.is direction with little impact. The development of technologies which put human energy to more productive use and reduce drudgery needs to be set on a more organised basis with the requisite institutional support. Likewise, efforts should be made to raise the draught power of animals through improved breeds so that they become more efficient converters of fodder into energy.

The Programme

15.26 As mentioned eariier, conventional energy technologies are characterised by long gestation periods. It takes even longer to bring about significant changes in the pattern of energy consumption. Appropriate policy and investment decisions have there fore to be taken without loss of time if the country is to meet the challenge which the energy problem will pose in the coming decades. This concern is reflected in the increased allocation made in this Plan for accelerated exploitation of India's domestic resources of oil, coal, hydro and nuclear power. The scale of the energy forestry and bio-gas programmes is being expanded sharply. Funds have also been provided for a more intensified research, development and demonstration effort in the area of renewable energy technologies, as also for a more efficient harnessing of animal energy. The devils of the programmes and schemes are set out in the sections which follow. As for measures of energy conservation, the need is not so much for Plan investments as for appropriate fiscal policies and establishment of institutional mechanisms for regulation, extension and training. These will be pursued during the plan pehoa.

POWER

Review

15.27 The total installed generating capacity which was only 2300 MW in 1950, increased to a little over 31000 MW by the end of March, 1980. The total generating capacity at the commencement of the Sixth Plan was as below:

Table 15.1 Installed capacity as on 31-3-1980 MW

15.28 During the decade 1970—80, installed capacity has grown at an average annual rate oi 7.2 per cent. While over this period, thermal capacity increased at the rate of 8.0 per cent the capacity of hydro units registered a growth rate of 6.4 per cent. The share of nuclear capacity continues to be modest, accounting for a little over 2 per cent of the total capacity at the end of March, 1980.

15.29 In parallel with the increase in generation capacity, there has been a steady expansion of the transmission and distribution net-works. It is estimated that by March, 1980, the total length of 400 and 220 KV lines was of the order of 33000 ckt. kms., while that of 132 and 110 KV lines was about 58000 ckt. kms. Apart from the increase in number of lines, a significant step in the recent past has been the introduction of 400 KV transmission for bulk power transfer over long distances. Considerable progress has "also been made in the construction of inter-State and inter-Regional lines to facilitate grid operation and transfer of power from surplus to deficit areas.

15.30 As a result of the high priority extended to rural electrification, there has been a spectacular increase in the last three decades in the number ot villages electrified and irrigation pumps energised. This would be apparent from the table bdow:

Table 15.2 Progress of Rural Electrification

With a coverage of 2.5 lakh out of the total 5.7 lakh villages in the country, the percentage of villages which have access to electricity has touched 43 per cent. Though, since the commencement of the Third Five Year Plan, the primary focus of the rural electrification programme has been on the stabilisation of agriculture through the exploitation of ground water resources, village electrification gained importance with the introduction of the Minimum Needs Programme in the Fifth Plan, which aimed among other things at providing basic ameni'ies to the rural areas. Since 1973, special schemes have also been introduced for accelerating electrification in the remote and backward areas.

15.31 Substantial as the growth of the 'power sector has been, power shortages have become almost endemic in various parts of the country. The rate of growth of power generation has not matched the growth of installed capacity, much less ihe growth of demand for electricity. There have been persistent delays in construction of projects, the commissioning of new capacity falling short of targets year after year. In the five year period 1974-79, the shortfall in the addition of new generating capacity compared with the target was as high as 40 per cent. Delays in equipment delivery by manufacturers, inadequacies in the organisational capabilities of State Electricity Boards in regard to investigation, project formulation, project implementatton and management, and in a few cases, mismatch between actual flow of funds to Elecetricity Boards and project requirements, have been the major factors responsible for the time and cost over-runs of power projects. The slippages in commissioning schedules Inve been aggravated by deterioration in the performance of thermal power stations, whose plant load factor came down to 45 per cent in 1979-80 as against the peak level of 56 per cent achieved in 1976-77. The abnormal time taken for stabilisation of new generating units, deficiencies in operation and maintenance and inadequacies in coal supply and deterioration of quality of coal, have been identified as the major factors responsible for the sub-optimal performance of thermal power units in the recent years.

15.32 The percentage of energy lost in the transmission and distribution systems continues to be high and has remained at about 20 per cent over the last several years. Non-availability of aluminium, steel, insulators, etc., have adversely affected the progress of construction of major transmission lines. In general, the growth of transmmission and distribution system has not fully matched the expansion of generation capacity thereby affecting both the quality and reliability of supply and posing problems in transfer of power between different electricity systems. While no doubt the growth of rural electrification has been phenomenal when viewed from an all-India angle, a disaggregated analysis discloses wide interstate and intra-State differences in coverage Even in villages to which the power supply lines have been drawn, the proportion of rural families using electricity continues to be quite low and the impact on rural industrialisation has also not been significant. These are all areas of concern which call for remedial action.

PLAN 1980—85 Generation

15-33 Considering the deleterious impact of power shortage on the productive sectors of the economy, the objective has to be to achieve a balance between supply and demand in as short a time as possible. The all-India consumption of electricity in 1984-85 is estimated at 148 Twh. This will require a generation of 191 Twh compared with the actual generation of 112 Twh in 1979-80, implying an average annual growth rate of 11.3 per cent during the Plan period. Taking into consideration the gestation lags in the construction of power projects, advance action had been taken to meet the power demand anticipated to arise during the Sixth Plan period. At the end of March 1980, generatinc cao'acity totalling 29,665 MW had been sanctioned and the project's were in different stages of construction. Of this, it is anticipated that 19666 MW would be commissioned during the period 1980-85 comprising 13.846 MW of thermal, 5130 MW of hydro and 690 MW of nuclear units. As would be apparent from these figures, the bulk of the addition wo-'ld be thermal: bv the end of the Sixth Plan, the proportion of thermal units in the total installed capacity would increase to 65 per cent. The commission-ino programme, while being realistic, is predicated on the maintenance of delivery schedules by the various manufacturers and timely availability of cement, steel, etc. Arrangements for monitoring the progress of the proiects and flow of materials have already been made.

15.34 In a sector like power, it is obvious that planning has to be based on a longer time horizon, specially as the construction period of hydro and nuclear power projects extends well beyond a plan period. The economic perspective indicates a generation requirement of 287 Twh in 1989-9Q and 380 to 400 Twh in 1994-95 which would call for an addition of 20,000 to 25.000 MW of capacity in the Seventh Plan period. Of this the schemes already under construction would contribute about 10,000 MW between 1985 and 1990. For the rest, action will be initiated during the next five years to take up construction of new projects to synchronise with the build-up of power demand. E"-^y effort will be made to give an impetus to hydro power generation since this is a replenishable form of energy. This will by no means be easy; in a situation of resource constraints, high initial costs and lo:^' gestation periods of hydro development can pruve to be formidable hurdles, apart from the fact that the balance of the unexploited potential is largely in remote and inaccessible areas, sometimes also posing major technical problems. In the choice of locations for thermal power stations, preference will be given to pit head sites, but given the rigidities inherent in the pattern of investment flows in the Central and the State Plans as well as technical considerations of system stability and the economics of power transmission, these would necessarily have to be supplemented by some load centre based power stations.

15.35 As explained earlier, it has become necessary to acelerate nuclear power development in the country. While the full benefits of the Rajasthan and Madras atomic power stations would become available during the Sixth Plan, the construction of the Narora Power Station will reach an advanced stage, the first unit at this station going on stream in 1985-86. The PI i makes provision in addition, for investments on phased starts on three more nuclear power stations, each of which would have two generating units of 235 MW capacity. While this would undoubtedly mean a sie-p -iip in the tempo of exploitation of nuclear power. it has to be recognised that in relation to the total capacity of the power systems in India and their rates of growth, the contribution of nuclear power will remain relatively modest in the coming two decades.

15.36 For historical and other reasons, the burden ^f power development has mostly been borne by the Staťc Governments in the past. To begin with, the role Central Government in power generation was 'ined to the atomic power stations. Thereafter the e entered the area of hydro power development iimfted way, taking up construction of selected projects in the relatively remote areas of the North and the North-east. It was only during the Fifth Plan t^;)) a marked increase in the Central involvement iq power generation was visualised and a beginning made in the construction of super thermal power stations, wh""h would benefit more than one State. For construction, operation and maintenance of thermal and hvdro prniects in the Central Sector, the National Thermal Power Corporation and the National Hydroelectric Power Conroration were accordingly set up. Having regard to the special conditions of the North East-'rn rfgion, another agency, viz., North-Eastern R; ciric Power Corporation was also established to take no the construction of medium sized power projects in the region

15.37 The future approach to the demarcation of responsibilities between the Central and the State Governments in respect of power generation has become a crucial issue for the long-term power planning of the country. Power development has become increasingly capital intensive and the construction of big hydro power projects or large pit head thermal power stations involves investments of an order which is beyond the capacity of individual States. With increasing capital intensity, it has become more important than before that the country should derive optimal benefit by the integrated operation of powar stations, which confer the dual benefit of minimising costs and improving system reliability. Past experience indicates that multiple ownership of power stations and the tie lines leads to almost insuperable technical and commercial problems in the way of truly integrated operation of electricity grids. The Committee on Power (Rajadhyaksna Committee) has suggested that the majority of the new .power stations should be implemented in the Central sector in order that about 45 per cent of the total generating capacity in the country may be under Central ownership and control by the close of the century. The recommendations of the Committee are as yet under examination. Meanwhile, the new Plan seeks to continue the process of enlargement of the Central power sector, though not at the pace contemplated by the Committee on Power. At (present, the total installed capacity in the Central Sector stands at 3277 MW. With the completion of the various schemes already under execution, this will go up to about 7742 MW by 1984-85. Provision has been made in the Plan for taking up the super thermal power stations at Singrauli, Korba, Ramagundam, Farakka and Neyveli to their full capacity; a start has also to be made on a new set of similar stations at other pit head locations. Nuclear power capacity, as already stated, would be expanded. A few hydro electric projects are also slated for Central implementation.

15.38 Installation of captive power stations will be encouraged in industries where there is scope for combined heat and power generation. Captive units will be p trmitted in large power intensive industries such as steel and aluminum which require installation of power Stations of reasonable size and efficiency to cater exclusively for their requirements. Fertilizer and other plants, which have expensive eoaioment sensitive to power system flunctuations would also be allowed the facility of having their own power supply arrangcmeL/ts. In other cases, the present policy of discouragiitg captive units will continue.

15.39 Over the year's, the trend has been to install thermal generating units of increasingly larger capacity in order to take advantage of higher thermal efficiency and accelerate the rate of addition of new capacity. During the Sixth Plan, the overwhelming bulk of new thermal capacity will be accounted for by units of 210 MW each. This plan period will also witness a move to the' next of 500 MW. the first unit of which is being installed in the Trombay power station during 1982-83. Installation of similar units in the second phase of the Central super thermal stations is Programmed. The location of such large units and their phasing would naturally have to take into nccount considerations of system stability.

15.40 With the capacity addition projected in the next live years, there snould be an improvement m tbe power situation in the country by the close of the Jflan. The forecast is that in 1984-85, with the exception ot the Norttiem Region, the energy requirement and peak demand in other regions wuuid be either iuily met or the delicn would be marginal. There would, however, be shortages in the intervening periods in some parts of the country. In the Northern Region, the gap between requirement and availability will not be fully bridged within ihis Plan period. 10 the extent possible, the shortages will have to be met through inter-State transfer of power aad demand management by staggering holidays and working hours, rostering agricultural pump sets, etc.

15.41 The above forecast is predicated on a distinct improvement in the working of thermal power stations. The poor performance of these stations has been the subject of study by various committees and expert groups and the areas where action is needed for enacting improvement have been identified. A project renovation programme is already in progress. Roving teams of experts have been constituted to monitor tiie operation of certain identified thermal stations. The supply of coal and furnace oil is also being closely monitored. Training of engineers and technicians in the operation and maintenance of stations has been intensified. A central bank of critical imported spares is being operated to minimise delays in procurement of spares and thereby reduce the down-time for maintenance. Steps have also been taken for design improvements and greater attention to quality control in the process of manufacture. All these efforts, it is expected, would lead to higher availability of thermal power sets in the coming years.

Transmission and Distribution

15.42 Besides maintenance of the tempo of expansion of EHT, sub-transmission and distribution lines coHMnensurate with the growth of generation capacity, uk aťost significant feature of the 1' and D programme hi the Sixth Plan will be the proliferation of the 400 KV system. Long term power system studies have been carried out and are being constantly up-dated to evolve the configuration of the major 400/220 KV tines needed for evacuating power from generating stations and to establish inter-grid and infra-grid linkages. Several of the State electricity Boards have already initiated steps to develop design, construction and erection capability required for 400 KV lines.

15.43 Considerable progress has besn made in the establishment and operation of the five regional electricity grids. While the Southern Region Load Despatch Caitie has become fully operational, interim RLDCs are functioning in the other regions. Construction of the permanent RLDCs and procurement and installation of equipment have reached an advanced stage. The permanent RLDCs are expected to attain operationality by 1983.

15.44 The regional grids have ultimately to be welded into a national grid, -which would enable the country to get maximum benefit from the complementarity of the electricity generating potential in different pans of ttie country and the diversities of system demands. The dinerent segments which would coiib-titute the national net-worK have been idenutied through the. long-term system studies reterred to earner. Some of me lines which fit into this net-^urk nave already eitner been completed or are under constructioi.. Some more would be added in ttie commg five years. Toere are, however, major operational and tecnnical problems involved m grid operation, whether a; the regional or the national level. One 01 me major recommendations of tha Rajadhyakiha Committee is that the ownership and operational cun-trol of the RLDCs and the key transmission hues should be with the Centre, with power to regulate me generation pattern, tie-line flows, etc. Involving as it does a major change in the structure of the elecincuy industry, tins recommendation needs to be examined m consultation with the States. Provision has been inaue in the new plan for the construction of some of tnese lines in the Central sector.

15.45 As mentioned earlier, the T and D loss in most of tne Slate electricity systems continues to be at a fairly high level. An increasing proportion of iiiduc-live coiineilt.d loads, over-extended distribution lines, inadequate transformer capacity and the inabiliy o transmission lines to cope with the increasing icwl have resulted in poor voltage conditions and imen'up tions of supply specially in the rural areas. Reduction ot system losses and improvement in the quality of supply call for systematic planning of the T and U system and a continuous programme of system. Im-provment which comprehends all the stages starting trom the power station busbars to the consumer outlet. The State Electricity Boards, it is expected, would give as much attention to the improvement of the T and U net-work as to addition of new generating capacity.

Rural Electrification

15.46 With the ground water potential available 'si the country, it is estimated that there is scope tor installation of 120 lakh pump sets spread over the dinerent parts of India. It is, therefore, proposed to energise 25 lakh pump sets during the Sixth Plan iu addition to nearly 40 lakh electrical pump sets isi operation at the commencement of the Plan period. Special attention would have to be paid to pump set energisation in the States of U.P., Bihar, West Bengal, Orissa and Madhya Pradesh which still have a large untapped ground water potential. While the Rural Electrification Corporation would step up its assistance to State Electricity Boards to take electricity to new rural areas, the programme of energising pumpsets is expected to receive a boost from a scheme initiated iwo years ago of pint financing of a special programme for agriculture by REC, ARDC and commercial banks.

15.47 The target for village electrification under ihfc Sixth Plan has been fixed at one lakh villages. A part of this target would be accounted (free under Minimum Needs Programme, which would1 cover( 46,000 vi Bages. A mujoc propoilion ot the MNI* target fies in U.P., M.P., eastern and north-eastern India. Having regard to the thin population density, difficult terrain, etc., in the north-eastern region and in other hill and tribal areas, the Rural Elecrification Corporation has liberalised its criteria for judging the viability of rural electrification schemes prepared for such areas in order to facilitate the extension of electrification to them. The Corporation is also operating a special programme for electrification of Harijan bastis all over the country. Schemes for extension of electric supply to small-scale and tiny industries in the rural and semi-urban areas have also been introduced.

Training

15.48 Recognising the importance of training engineers and technicians at all levels for efficient operation and maintenance of power stations and the transmission and distribution lines, a fairly extensive training network has already come up in the country. A number of State Electricity Boards have set up their own training establishments, specially for the first and second level operating staff. In addition. Government of India set up some time ago four thermal power station personnel training institutes in the context of the induction of large sized thermal sets based on sophisticated technology. A power system training institute to cater for the training requirements of EHT systems and a hot line training centre for training personnel in the modern techniques of live line maintenance are already in operation. These facilities, however, have been found to be inadequate in terms of both quality of training and capacity to meet the increasing need for trained personnel. In order to bring .ill the Central training establishments under unified control and management and with a view to give concerted attention to their improvement and expansion, the Power Engineers Training Society has recently been constituted as an autonomous body. The Sixth Five year Plan makes provision for new schemes to be implemented by the Society, including the installation of simulators.

Research and Development

15.49 The major R and D activities in the power sector have so far been carried out by the Central Power Research Institute and the Central Board of Irrigation mid Power (OBIP) through the agency of the State Electricity Boards and research institutions, apart from equipment R and D carried out in-house by the major manufacturers, While the studies sponseored by the CBIP have mostly been on operational problems, the thrust of the work in the CPRI has been on material testing, such as of transformer oils and insulation materials. However, in relation to the massive investment being made on the power sector, the overall R and D effort has remained inadequate. There has also been insufficient involvement of existing research and academic institutions such as IITs and Regional Engineering Colleges in tackling R and D problems of the power sectors. Beside increasing the financial allocation for S and T programmes in this area, it is proposed to strengthen the institutional arrangements for carrying out an effective R and D programme.

Organisation and Management

15.50 Among the major recommendations of the Committee on Power arc those relating to the restructuring of the State Electricity Boards, which will continue to shoulder the major responsibility for implementing the ambitious 'ptower programme projected in the coming years. The Committee has made detailed suggestions regarding the composition of SEBs, manner of selection of the top personnel, improvement of management systems and procedures and information and control systems. It is important that measures for strengthening the organisation capabilities of the SEBs are implemented expediti-ously. Attention would have to be given to the improvement of systems and procedures for project formulation and implementation, monitoring and inventory control. Also, the formation of specialist cadres within the the staff of the Boards which has already been accepted by the States, needs to be pursued vigorously

Financial Performance

15.51 As is well-known, most SEBs are operating at loss and the losses have been on the increase from year to year. The total commercial loss of the SEBs which was about Rs. 103 crores in 1973-74 increased to about Rs. 450 crores in 1979-80. High capital costs caused by delay in completion of projects, high overheads caused by over-staffing, high operating costs on account of low capacity utilisation and a tariff structure which continuously lags behind the rise in incremental costs, have been mainly responsible for the increase in losses. Though the Electricity Supply Act was amended some time ago to make it mandatory for a SEB to earn a positive return, there is no noticeable sign of improvement as yet. The investments in the power sector are rising at a rapid rate which makes it imperative that the industry should meet a sizeable proportion of its investment requirements through generation of internal resources. The Committee on Power has recommended that the power utilities should aim at generating internally about 50 per cent of the resources required for their expansion. A carefully worked out package of measures to improve the financial condition of SEBs needs to be 'put into action by the State Governments without further loss of time.

Targets and outlays

15.52 The physical targets and financial outlays under the various categories are set out in the Table below:

Table 15.3 Sixth Plan Outlay On Power (Rs. crores)

"Exclusive of the outlay included in Rs. 285 erores fur Special Project Agriculture (SPA) (rec' s share). Rural Cooperatives, System Improvement Schemes and Harijan Basties.

Table 15.4 Expected Generating Capacity by 1984-85 (MW)

Capacity additions planned during the period 1980— 85 from the projects which are in the implementation stage are shown in Annexure 15.1. me State-wise installed capacity by the end of 1980—85 is given in Annexure 15.2 and the State-wise outlays are set out under Annexure 15.3.

COAL

Review

15.53 The need for systematic and scientific development of the coal industry has been recognised from the inception of the process of national economic planning in the country. Over the successive Plan periods, several measures were introduced to up-grade our knowledge of the coal resources, introduce scientific classification, promote conservation, imp'rove mining techniques, regulate distribution, optimise utilisation and stimulate research and development covering all the facets of the coal industry. These measures could not, however, achieve full impact 'since the coal industry was almost wholly under private ownership and management which tended to adopt a profit-oriented approach without always taking note of the long term interest of the industry. As the first major step towards achieving the objective oŁ u sound development of the coal industry in India through the induction of the public sector, the National Coal Development Corporation was set 1956. But it was not until the nationalisation of coal mines in 1972 and of non-coking coul mines ^1Q73 that a comprehensive programme of development of coal mines which covered introduction of newer production technologies, standardisation of equipment and development of infrastructure facilities, together with a significant step up in social security and welfare measures for the coal mines, could be initiated.

15.54 Coal production, which stood at 33 million tonnes at the beginning of the First Five Year Plan, rose to 78 million tonnes by 1973-74, the terminal year of the Fourth Plan. The production build up during the successive Plan periods was as follows:—

Table 15.5 (Million tonnes)

Following the dramatic increase in oil prices in 1973-74, the Fuel Policy Committee had underscored the imperative necessity of giving a major push to coal development in the country. It was against this background that, compared with the public sector outlay of Rs. 110 crores in the Fourth Plan, the outlay for the coal sector in the Fifth Plan was raised to Rs. 1025 crores. Through reorganisation and reconstruction of existing mines and the introduction of new methods and techniques in the development of mines, production was raised by as much as 22 million tonnes in the first two years of the Fifth Plan period, the hundred million tonnes level being touched in 1975-76. But, on account of recession in certain sectors of the economy, the production outpaced demand, with the result that pit-he-ad stocks accumulated to the extent of 14.6 million tonnes by the end of 1976-77. Considering the trends in the pattern of demand, the requirement of coal at the end of the Fifth Plan (1978-79) was reassessed at the mid-term review at 124 million tonnes as against 135 mt. visualised at the beginning of the Plan. The later half of the Fifth Plan period' witnessed a reversal of the situation; the demand for coal built up once again, but production failed to pick up and stagnated at around 101 million tonnes a year. The continuing coal shortage had a pervasive impact on the overall economic growth of the country. An analysis of the reasons for the non-materialisation of the production targets revealed that v/hile deficiencies in internal management at different levels was a contributory factor, the major factors which impeded increase in coal production were shortage of power, absenteeism and labour unrest, shortage of explosives and bottlenecks in the movement of coal. In 1978-79, the loss of production on account of these constraints which were external to the industry, is placed at 16 million tonnes.

15.55 The pattern of coal consumption has undergone a signiricant change during the past two' decades. Till the beginning of the Second Plan, Railways were the single largest consumer accounting fur a third of the total consumption. With increasing dieselisation and electrification, the consumption of coal by Railways has been declining steadily. On the other hand, the demand of coal by steel industry and for power generation has increased sharply, other major consumers being cement, fertilizers, textiles, paper and brick manufacturing industries.

PLAN 1980-85

Demand

15.56 By the end of ihe Sixth Plan (1984-85), the demand of coal is expected to be 173 million tonnes (Raw Coal: 168 million tonnes and washery middlings: 5 million tonnes), the sectoral break-up of which is as shown in Table 3.13 in Chapter 3.

Exploration

15.57 From a consumption level of around 102.6 millioa tonnes in 1979-80, the demand is expected to rise to 168 million tonnes in 1984-85. A tentative estimate places the demand at the end of the