India’s Power Network Breaks Down: Second Blackout This Week Affects Area Where 680 Million Live (WSJ)

India’s Power Network Breaks Down (Wall Street Journal, July 31, 2012):

Second Blackout This Week Affects Area Where 680 Million Live, Embarrassing Nation by Exposing Ramshackle Grid

NEW DELHI—India suffered the world’s biggest-ever power outage Tuesday as transmission networks serving areas inhabited by 680 million collapsed, putting the nation’s ramshackle infrastructure on stark display.

The grid failure, the second massive blackout in as many days, happened around 1 p.m. local time and affected 18 states and two union territories in north and eastern India, grinding trains across large swaths of the country to a halt, forcing thousands of hospitals and factories to operate on generators, temporarily stranding hundreds of coal miners underground and causing losses to businesses estimated in the hundreds of millions of dollars.

The government said power was about 80% restored in north India by late Tuesday evening.

Access to electricity is far from universal in India, and Indians are accustomed to regular power outages in particular neighborhoods or sections of cities. Many businesses and farmers see backup diesel-run generators as an absolute necessity. Still, Tuesday’s massive breakdown was unprecedented, impacting a population larger than the U.S., Brazil and Russia combined.

For a nation that sees itself as an emerging global power, the event was a huge embarrassment. It put on vivid display, for Indians and the world, how rickety the country’s basic infrastructure is. And it could further tarnish the perception of India among foreign companies who have long viewed the country’s outdated roads, ports and power networks as major drawbacks of doing business here.

The power outage wreaked havoc on businesses and travelers. About 200 trains stopped operating for several hours. Metro rail services in the national capital of New Delhi and its suburbs were halted. About 270 miners were stuck in two underground coal mines in eastern India as elevators stopped working. All had been rescued by late Tuesday.

At the Nigambodh Ghat, a New Delhi crematorium, three dead bodies were cremated using wood after the power failure, an official at the crematorium said. In India, Hindus generally try to cremate bodies the same day a person dies if the death occurs before dusk, and furnaces generally run on electricity.

The All-India Institute of Medical Sciences, one of Delhi’s main state-run hospitals, ran its diesel generators for almost two hours.

A tea plantation in the foothills of the Himalayas, Kailashpur Tea Estate, said it had to give its generators a rest every few hours, stalling production. And since the generators don’t supply power to street lights on the estate, which is surrounded by forests, the power outages raised some specific concerns. “Leopards and elephants often wander into the plantation,” said senior manager Manas Bhattacharya. “About three months ago, two female workers were mauled by a leopard on the estate. Wild elephants are everyday visitors.”

In the western city of Jaipur, Swati Jain, co-founder of the Happy Store, which sells handicrafts there, said there was no electricity between 11 a.m. and around 4 p.m. It was “awfully bad,” said Ms. Jain, adding that even during peak summer hours, locals are used to only two-hour power cuts at most.

The tiny Himalayan kingdom of Bhutan, which borders India, came to its much larger neighbor’s aid this week, releasing additional power from its hydroelectric plants while India worked to restore its networks to full capacity.

The government Tuesday even extended the deadline for filing of income-tax returns by a month to Aug. 31, citing “reports of disturbance of general life caused due to failure of power,” among other reasons.

The blackout on Tuesday was the largest known blackout in history in terms of the population affected, according to an estimate by the Associated Press. The second-worst was India’s outage Monday, which affected a population of 370 million followed by a 2005 outage in Indonesia which left almost 100 million in the dark, the AP said.

The cause of the outages will be investigated by a three-member, government-appointed committee.

Capping a surreal day when the power outage dominated cable news channels—which continued to broadcast for the benefit of those who still had power—Prime Minister Manmohan Singh gave an effective promotion to Power Minister Sushil Kumar Shinde, on whose watch the blackouts have occurred. Mr. Shinde was named the next home minister, the nation’s top security official and one of the Cabinet’s most prominent posts. He will replace P. Chidambaram, who will take on the post of finance minister; Prime Minister Singh had been in charge of finance.

Corporate Affairs Minister Veerappa Moily will take over the power portfolio. Analysts said the cabinet shuffle had been in the works and its timing was coincidental.

The Congress Party-led national government headed by Prime Minister Singh is already fighting to dispel the perception that it is mismanaging the country’s economy and failing to follow through on promises to carry out big-ticket reforms, including promises to spend $1 trillion on infrastructure projects by 2017. Gross-domestic-product growth is expected to slow to 6.5% in this fiscal year, the central bank said Tuesday.

A communications adviser for Mr. Singh, Pankaj Pachauri, said the prime minister had spoken to Mr. Shinde, the current power minister, and “asked him to urgently look into the matter.”

The blackout adds to an array of woes in India’s crisis-ridden power sector. Generous power subsidies for farmers and politicians’ reluctance to raise electricity rates for consumers have left state utilities with billions of dollars of accumulated losses. Shortages of fuels including coal and natural gas have forced power plants to run well below capacity. Nuclear-power projects have been stalled by environmental protests and equipment vendors’ concerns about India’s accident-liability regulations.

The upshot is that many parts of India suffer chronic power shortages. In several large states, electricity demand outstrips supply at peak hours by more than 12%. Many rural hamlets still have no electricity at all. The government has failed to carry out its

The outage highlighted another problem that policy makers must address: Some states are drawing more power from the national grid than they have indicated they will use in the daily forecasts they provide to the government. Officials said they’re investigating whether such overdraws were responsible for initiating the cascading outages. Although states are fined when they don’t stick to their plans, experts say the penalties aren’t a deterrent. “The penalties need to go up—they aren’t sufficient to stop this undisciplined behavior,” said Kameswara Rao, head of the power and utilities practice at PricewaterhouseCoopers India.

Mr. Rao said Indian policy makers didn’t anticipate how quickly electricity demand would rise in the past few years as economic growth has expanded the ranks of the middle class and created more consumers of power-hungry modern appliances like air-conditioners. He said state transmission utilities badly need investment and skilled manpower to cope with grid problems and provide protections against massive outages.

Some analysts said public outrage over the widespread outages may force Prime Minister Singh’s government to tackle reforms in the power sector.

“Unless this government wants to commit political suicide, there’s no way they can ignore this,” said Abhey Yograj, managing director of Tecnova, a consulting firm that advises foreign companies on India. He said the government must not only deal with the immediate crisis–the failure of the grid–but the underlying issue of chronic shortages in electricity generation, which means boosting production and imports of fuels for power plants and doing away with counterproductive energy subsidies.

The Congress-led government’s leading opposition, the Bharatiya Janata Party, seized on this week’s blackouts. “This is a manifestation of mismanagement,” party spokesman Prakash Javadekar told reporters. “The prime minister owes an answer to the people of this country.”

Industry critics were equally tough on the government after the back-to-back days of outages. “The developments of yesterday and today have created a huge dent in the country’s reputation that is most unfortunate,” said Chandrajit Banerjee, the head of the Confederation of Indian Industry, a leading trade group, in a statement.

Rabindra Nath Nayak, chairman of state-run Power Grid Corp. of India Ltd., said it would take some time for the government to ascertain the reason for the power failure. The panel investigating the incident is expected to turn in its report in two weeks. Mr. Nayak said “tripping at several interconnectivity points of the [northern] grid could have had a cascading effect”.

“Even before we could figure out the reason for yesterday’s failure, we had more grid failures today,” he said. Power Grid operates India’s five regional grids comprising more than 62,000 miles of electricity transmission lines.

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