Indian Power Sector - the elephant in the room 
Excessive use of Diesel power

I read an article highlighting issues around coal allocation and the consequent problems faced by power producers who have invested in them. I would argue that the problem is just not limited to the issue of coal allocation and highlight three major factors.

The first one is the inflated outlay in the project costs of some projects which was fueled by the issue of allocation letters or LOI. These promoters had other objectives than building an asset and working it for returns over its life cycle of 30 plus years. Hence the focus on building quality, efficient plants at optimum costs and within a schedule was not the only factor. 

Second; the demand growth expected including the realization of the latent demand in the system is yet to happen in our country due to the perennial loss making performance of the distribution utilities.  These utilities can bankrupt a well functioning power plant in any given day by indiscriminately delaying the payment due to them. Even worse, is the load shedding which they resort to due to their inability to purchase power.

And the third and the elephant in the room is Diesel power. Diesel power usage is not monitored nor its costs analysed as it must be for an economy which is reliant so much on imported fuel. One can only guess the installed capacity under use and then may be extrapolate to arrive at the consumption. 

With 92 GW of diesel plant capacity (2015 number of 72 GW plus 5 GW per year) and most of it being used this diesel power is almost 25% of the installed capacity of the country. It is time that the electricity planners account this in more regular manner and work to eliminate or say minimise the usage. Call the king naked and go about clothing him. 

There is no reliable pan India statistic available on the hours clocked by these diesel plants or the energy generated. 

Diesel energy generation is highly polluting, inefficient and costly one at that. The reliability factor which is promised by these plants is the only attraction. To reduce the usage of these plant the distribution utility has to improve its performance and ensure reliable quality power. Usage of such terms as reliable and quality are shun when you buy power from a public utility in India. And imagine the situation when substantial part of industries and IT parks switch over completely to utility, the peak in the system will shoot up by 25% or more, calling for immediate running of most of the now idle plants.

Regulators are deliberately blind to this fact as the distribution utilities are not ready to correct themselves. It is time a clean up act is initiated to look at the issues that perpetuate encouragement of diesel power over public utility power and act on it. 

A long term solution to this problem is to start with total revision of tariff and create a true pass through facility of production costs of power to majority of consumers and eliminate the cross subsidies. Essential subsidy addressed to specific consumers must be done by DBT and not through tariff. This has to be followed up with bringing in fresh capital to revamp the infrastructure required for ensuring reliability.  I know all this is a tall order. But someone has to bite the bullet. Else the issue will linger on and more problems will add up.

The Banking Mess in India

Yes bank has become a No bank. SBI and LIC are asked to rescue as the unfolding crisis, if not stopped, could take with it much larger numbers of financial intermediaries causing severe damage to the investing public at large. 

We are hearing about banking failures often nowadays. Every time sound bites are shared about what went wrong. Many consumers go through turmoil and some face losses. But after a while we get back to routine and wait for the next disaster to happen. 

Are we seeing any improvement at all this time around? When is it going to end or when will we see this kind of failures stop happening regularly and we stop seeing any failures of banks in the next few years? Are there any plans to stop such failures? If there is, can someone share so that an ordinary investor can be better informed, instead of hearing the same oft repeated cliche - 'this bank was sinking. Everyone knew about it in the last few months and we had informed our investors' is the common refrain which runs amongst those who give out sound bites post failures. They also add, a disclaimer, 'But nobody thought that the crisis was imminent'. Post the event of course there are voices, which say the Regulator should have intervened earlier.

What stands out through these events is the utter failure of the Banking Regulator to act in time as well as the colossal and irreparable damage caused by our rating agencies to dish out high ratings to unworth companies. 

It is time this is reset. This time around Tirumala Balaji had a narrow escape as He encashed(and not renewed) His Rs 1300 crore FD with Yes Bank; but His avatar Lord Jaganath was caught. He lost a Rs 545 crore.(source The Hindu)

Gods may not be so kind next time around.

Technology - a handy tool at crisis situations to tackle Pandemic


Technology confronting COVID 19 

As I listened to the piece from CNN on the Black Plague of 14th century (1347 - 1351) having traveled to Europe and other parts along the old silk route which is strikingly similar to the one COVID 19 is spreading, I was glad that we are in a better connected world than during those medieval times. 

I had also never thought that I would contemplate use of the term 'Pandemic' to describe the advent of sweeping reach of new technology platforms and user based apps. Corona Virus or COVID 19 has enabled this a possibility. Pandemic spread of App based solutions are helping us combat the virus in myriad ways.

As I read a detailed piece by Anantha Krishnan titled 'China's high-tech battle' on the use of Technology or App based solutions to help face and help tackle the menace of this Pandemic created by COVID 19, I forgot about Privacy or related scares of the technology platforms and was keen to embrace more of this and also encourage. 

What made the difference?

For one, the App based Pandemic can spread faster than any virus which is something akin to snail mail. Remember the old days when you write and post a letter and it reaches the destination by various modes of transport in a weeks time at the most. 

Secondly location based inputs from users can map the situation on to dash board and displayed for public and managing officials of various hands of the organisations which are working to combat the menace in many fronts. Real time updates comes in handy in such alarming cases as any person who has experienced a similar situation as in a flood or storm or earth quake. 

And food delivery app which has developed the technique of handing the delivery of hygienic quality food at customers premises is the ultimate feather in the cap. You can stay isolated with out any access to provisions or fresh produce, but get what you want (or what is recommended based on your conditions) at your door step.

I conclude with one more instant of the excellent use of the technology. ` Warning to the user by a colour code based indication on your smart phone app, indicating the possibility of you being susceptible to catch the virus. Amazing.

Are'nt we all glad that we are in this technology driven era?