Friday, May 04, 2007

Failure at execution of large hydroelectric projects

Not having enough electricity, and criticizing the government for not providing a basic amenity such as electricity? Well, you are right to blame the government. In another sign that the government structure of babudom and its associated organs such as the electricity and power companies are not equipped to do things on time and in budget, a parliamentary panel has concluded that the country's hydroelectric projects have cost 388% to 2,532% more than initial estimates. Read this report:

In a scathing assessment of India’s attempts at building up its power-generation capacity, a parliamentary committee on energy has disclosed that the country’s hydroelectric projects have cost 388% to 2,532% more than originally estimated.
For instance, 35%, or 14,393 Megawatts (MW) of the 41,110MW of new capacity that was to be created in the five years from 2002 to 2007 was supposed to come from hydro projects. But only 7,886MW, or just over half of the planned additions, have come online.
The committee also blames the power ministry for the long delays. “The committee is surprised to note that, in spite of all the measures, there have been abnormal delays in the execution of some hydro projects...The committee is inclined to believe that proper assessment of certain foreseeable factors, such as (those relating to) geology and funds, is not done with due seriousness and recommends the ministry to take adequate steps in that direction.”
While the average lead time of a new hydroelectric power project is around five years, the projects have been hampered due to reasons as varied as delays in investment decisions, contractual problems, land acquisition problems, geological surprises and natural calamities, such as floods.

These are very serious charges. Electricity is the life-blood of a country, and in India chronic shortage of electricty has hobbled agriculture, and industries from the big and small.
Project management for such large projects consists of good estimations, planning to build, and taking care of all the issues that may emerge to slow down the project. Only dedicated people who are responsible for their actions can be depended on to do this.
However, in our structure, with the ministries being led by politicians, and with the amount of corruption and political influence that happens in the execution of such projects, these sort of delays are to be expected (although we should never accept this sort of thing). For such delays, one can be sure that no one will be held responsible, and things will continue as they are.
Large private industries have learnt to depend on their own captive consumption, most small enterprises pay for generator use, and urban areas of all sizes depend on inverters and generators to fill the gap. Unless we bring in more privatisation with such projects being executed by private contractors who are awarded contracts fairly and without political influence, not much sign of salvation can be seen.
Thankfully, such private work has started to happen, notably in the area of road construction, and with the recent award of the ultra-large capacity power plants, things should improve.

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posted by Ashish Agarwal @ 5:02 AM