1. Economic Energy: Ensuring Access to Energy
India Energy Congress
Delhi 31st Jan 2007
Girish Sant
Prayas, Energy Group
Pune

2. for enhancing livelihoods…
Access to Energy
for enhancing livelihoods…
Present situation
Challenges of present path
What can help
Need for a transition plan
31st Jan 2007

3. Subsidy – Present annual expenditure
Present Situation
Examples of Revenue Subsidy
Kerosene – Rs. 10,000 Cr
Agricultural electricity ~ Rs. 15,000 Cr
Household electricity ~ Rs. 6,000 Cr
(Assuming 50 million Rs 100 /month)
Capital Subsidy
Rural electrification – Rs. 5,000 Cr
Approximate total ~ Rs 36,000 Cr /yr
(selected items)
31st Jan 2007

4. Distribution of Household by electricity use (kWh/month)
Present Situation
Only 25–30% of 200 million houses in India pay electricity bill > ~ Rs 200 / month!
Needs of majority are much different than rich minority…
31st Jan 2007

5. Other Issues Electricity Cooking Transport Present Situation
Limited hours of supply (usually excluding evenings!)
Official connection is too expensive, and risky (due to erratic bills)
Cooking
~ 90% of rural population uses biomass (as primary fuel)
Kerosene is expensive, many find it difficult to access it from official channels
Transport
Fuel or public transport is expensive…
31st Jan 2007

6. Challenges of Present Path
Large errors of inclusion and exclusion (subsidies are not progressive)
Difficult to prevent misuse and inefficient use
25 to 40% kerosene is un-accounted for (potentially used for adulteration)
Negative impact on bystander population
Air-pollution due to kerosene adulteration
Falling water levels due to over-pumping
31st Jan 2007

7. Challenges – farm power subsidy
Little benefits to poor farmers
Inefficient electricity use
Lowering of water table  negative impact on poor
Overuse of ground water
Competitive well deepening
Improper crop selection
31st Jan 2007

8. Challenges – farm power subsidy
Distribution of agricultural power subsidy in Maharashtra. Non-irrigated farmers (80%) did not get subsidy
Karnataka – Only 10% subsidy reached poor farmers
31st Jan 2007

9. For achieving improved access…
What can help
Just giving subsidy will not be sufficient
We need to
Specifically address needs of the poor,
Reduce cost of supply,
Better target subsidies.
31st Jan 2007

10. New revenue models
What can help
Innovative revenue models, if implemented judicially, can have following benefits
Better address needs of the poor, by designing appropriate services – with their incentive linked to service quality
Reduce cost of service
Can increase reliability
Example – Limited load connections (for say 40 Watt = 2 efficient lamps)
31st Jan 2007

11. Delivery mechanism
What can help
Subsidy is useful only if it achieves the objectives – delivery mechanism is a weak link that we need to strengthen
Use of technology can help (smart cards, finger prints for identification etc)
In addition it is essential to improve governance of delivery mechanisms by
Making them accountable to beneficiaries
Conducting external participatory reviews etc.
31st Jan 2007

12. Giving subsidy
What can help
It is worth considering creation of dedicated agency for subsidy disbursal
Subsidise items that have little alternate uses (better to subsidise modern biomass stoves, PV based lights, instead of kerosene or LPG)
Need to minimise subsidy – through promotion of efficient options (CFLs, agricultural pumps, etc.)
31st Jan 2007

13. Need for a transition plan
Sudden changes can cause major dislocations
The complex web of inefficiencies are not easy to undo – example of agriculture (power utility, pumping, irrigation systems, crop choice of sugar cane, sugar factories etc.)
Need to tackle major components of the system
31st Jan 2007

14. Movement of tariff over years: Maharashtra Case
31st Jan 2007

15. Special attention to Access is essential…
Summary
Special attention to Access is essential…
Reforms are needed in terms of
What we subsidise,
Whom we subsidise,
Improvement in accountability and governance of delivery mechanisms
Need transition plans that understand interactions of sub-systems
31st Jan 2007

16. Thank you for your attention… Prayas Energy Group girish@prayaspune
Thank you for your attention… Prayas Energy Group
31st Jan 2007