Electricity

Pay up if you want it

If there isn’t enough of it to go around, shouldn’t it become more expensive? If other commodities like tomatoes, glass and haircuts (that’s agriculture, manufacturing and services for you) aren’t exempt from this basic rule of economics, why should electrical power be?

Well, electrical power is constantly being made more expensive (a 12 percent hike is just round the corner) but the reason for that isn’t as cleanly attributed to the profit seeking of the whole demand and supply thing as other products. Utility companies in the developing world are just about the only commercial enterprises in the world that fork out huge advertising budgets to tell its customers to use lesser of its products.

Things wouldn’t, however, have been as problematic had the juice been priced high enough, or the inputs priced low enough. The problem with our power profile is the central position thermal projects occupy in the mix. With tensions in the middle-east driving the price of oil to lofty heights, electricity is bound to be more expensive. Couple this with the political compulsions that dictate subsidies to shield the end users from the price hikes.

The entire productive capacity of our grid is actually in excess of the total demand for power. There is no deficit. The deficit exists in only the ability to produce electricity at a cheap enough rate. The blackouts that attract our ire these days are an inversion of the original supply-demand equation: there isn’t enough of it to go around because it is expensive.

The hunt for cheaper electricity involves hydel power projects and gas projects from countries of the region, most notably Iran and the central Asian republics.

And then there is that last, often ignored aspect: distribution. Even with the current power profile, much economies could be achieved through a thorough maintenance drive within our DisCos. The transmission losses within our grid are enormous.