THE massive power failure in northern and eastern India last week, affecting 670 million residents in 21 states, may have been taken lightly by former power minister Sushilkumar Shinde — who was promoted as the country’s home minister in the midst of the crisis — but it was indeed a warning that the overstretched and tottering electricity infrastructure in the country will not be able to shoulder the burden for long.

Shinde, who immodestly rated himself as “an excellent power minister,” boasted that the ministry was able to fix the problem in a matter of hours, whereas a similar breakdown in the US grid a few years ago took nearly a week to rectify.

The looming electricity crisis in India and the enormous shortages being experienced by millions of consumers across the country is a direct result of the massive power play at work in the sector. Politicians have destroyed utilities by stonewalling pragmatic reforms and promising free electricity to favoured sections of the population.

Shinde may have been one of the least dynamic of power ministers in the country, but the portfolio has for long been handled by politicians who are incapable of bringing about much-needed changes in the sector. Electricity, under the Indian constitution, is a concurrent subject, with the states having an important say.

Thus, though the federal government has in recent years initiated several changes; state governments have been resisting them. Even industrially advanced states like Maharashtra have prevented their allegedly autonomous power distribution utilities from raising tariffs, for both urban and rural residents, though the cost of inputs have soared in recent times.

Crisil Research, part of a leading ratings agency, notes that the accumulated losses of all state electricity boards added up to a whopping Rs1.8 trillion (about $32 billion) last year. The net worth of these utilities had plunged to negative Rs750 billion.

The result: investors, both domestic and international, are reluctant to enter the power generation sector, as cash-strapped state utilities will not be able to pay for the power that they buy. The generation companies, who seek to increase tariffs, are bullied by political bosses and prevented from jacking rates.

The sector is thus deprived of much-needed funds for not just generating more power, but even to maintain the basic infrastructure, which includes transmission towers, local distribution units and sophisticated technology to guard against spikes.

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LAST week’s collapse of the northern and eastern grids happened because state utilities of five northern states – including Uttar Pradesh, Punjab, Haryana, Uttarakhand and Jammu & Kashmir – recklessly overdrew electricity from the national grids. Though the chief ministers and senior bureaucrats of these states denied that they were responsible for over-drawing power, the fact remains that many of these states routinely indulge in such acts.

The failure of the south-west monsoon this year has resulted in huge water scarcity in the agricultural states of Punjab, Haryana and Uttar Pradesh. According to the India Meteorological Department, the sub-division of Haryana, Chandigarh and Delhi has seen a shortfall of 71 per cent in June and July. In Punjab, the shortfall adds up to 66 per cent, in western UP it is 34 per cent and in eastern UP 19 per cent.

India as a whole has experienced a 19 per cent deficit in rainfall in June and July and with the El Nino phenomenon likely to set in, August and September are expected to be equally bad months. The acute water scarcity has led to farmers switching on pumps to irrigate their fields, resulting in massive demand for electricity in Uttar Pradesh, Haryana and Punjab.

Populist governments in all three states are reluctant to alienate the farm lobbies and allow them to freely access power from the national grid. Lack of discipline on the part of the states and the inability of central power bodies including the Power Grid Corporation of India – which manages the national grid – to enforce grid discipline, led to last week’s crisis.

When states draw more power than what they are entitled to, circuit-breakers are supposed to cut off supplies. But on July 30 (when the northern grid collapsed) and July 31 (when the northern, eastern and north-eastern grids collapsed), the circuit-breakers apparently failed to trip, or allegedly had been tampered.

The United Progressive Alliance (UPA) government, led by Manmohan Singh, the prime minister, has been unable to bring about changes in the power ministry, or in any of the other infrastructure sectors. The Congress, which dominates the alliance, has failed to find the necessary talent from amongst its parliamentarians to head crucial ministries.

Incompetent ministers have been heading key ministries including power, coal, roads, railways and ports – ministries that ought to be overseeing billions of dollars in investments that could ensure strong economic growth. However, instead of attracting more funds, the ministers have been engaged in internecine battles and turf wars, turning away prospective investors.

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THE shocking grid collapse last week also crippled the transport infrastructure in the country. The Delhi Metro, a state-of-the-art network, also saw its trains getting stranded underground, while Indian Railways was unable to cope with the crisis. Many trains came to a halt across northern and eastern India, and thousands of passengers had to sweat it out in the sweltering heat for hours.

Of course, many in the private sector remained unaffected by the crisis. Delhi’s privatised airport functioned smoothly, as it had adequate back-up power. India’s perennial power problems and unreliable supplies have forced corporates to invest in back-up power. Many of the large industries in fact do not access state power and prefer to generate their own electricity.

Besides having to pay more for unreliable power, industrialists and investors wanting to start new plants – or expand existing facilities – often have to bribe state utility officials to get the connections or extra power. It is easier and also cheaper, instead, to install one’s own power generating units.

Estimates are that the private sector has invested more than $30 billion in power generating units that are able to meet all their electricity requirements. The Indian Captive Power Producers Association estimates that Indian corporates have a capacity of generating 35,000MW of power. This is expected to double soon, as state electricity boards are unable to supply the needed electricity.

Though India has a power generation capacity of 205,000MW, there is a peak hour shortage of 12 per cent. An additional 25 per cent of the power is lost during transmission and distribution, much of it stolen by the electricity mafia.

During the 12th Five Year Plan (2012-17), India aims to add another 80,000MW to its power capacity. However, despite the ambitious plans, the country has never met a single five-year plan target, meeting less than half of the capacity-additions planned.

Most of the investments are in thermal projects, but the country is facing an acute shortage of coal and gas. Coal India Ltd, another government-owned monopoly, has failed miserably in enhancing supplies, despite sitting on enormous reserves. Lack of fuel has resulted in plant load factor plunging to record lows of below 75 per cent.

The government’s ambitious ultra-mega power plant (UMPP) project has also apparently failed. Each UMPP would have a minimum capacity of 4,000 MW, and combined would add 100,000 MW capacity by the end of 2012. However, there are contentious disputes between the successful bidders, who are now seeking a hike in power tariffs, following the spurt in the price of coal, and state-owned utilities who buy power from them.