India can learn from China’s experience when tackling power shortage problems

By Hu Weijia Source:Global Times Published: 2017/2/21 0:08:39

Efforts made by India to deliver reliable electricity are being closely watched by Chinese investors as the nation draws in interest from manufacturers. With concerns expressed by some media over Indian Prime Minister Narendra Modi's electricity push, China's ongoing pricing reform in electricity may prove helpful.

With reports saying that power remains inadequate or non-existent for 240 million Indian people, the nation needs to urgently increase its power generation capacity. However, this will not be easy with current problems in India's electricity sector. According to a recent report by the Financial Times, "utilities in at least four Indian states are months behind on payments" to companies who generate the electricity.

The country's scientific and technological progress attracted international attention with the successful launch of a record-breaking 104 satellites into orbit. It's hard to imagine that a country that makes great achievements in space exploration is unable to solve power shortages due to a lack of power generation and transmission technology. It is likely that the power shortage is a result of India's flawed administrative system.

The price of electricity is being squeezed by government intervention with tariffs keeping costs low. China faced similar problems in the past, resulting in a loss to its electricity sector at the beginning of 2010 as some State-owned enterprises were beset by financial troubles. China raised the on-grid electricity prices in some provinces in 2011 to reduce an increasingly intense shortage and then rolled out a reform to remove official interference in price determination. Introducing more competition into the power sector could ultimately lower electricity prices for Chinese manufacturers.

First implemented in Shenzhen in 2014, a pilot program in China was introduced in five more regions in 2015 and expanded to 12 more provincial power grids and one regional network in 2016. A similar prudent and step-by-step manner to enhance deregulation could help India avoid unrest caused by drastic reforms such as Modi's radical cash move.

Rolling out long-term reform measures requires more than steadfast determination. China's pricing reform is bound to be a systematic revamping of the country's electricity sector instead of simply improving the formation mechanism of prices. India has to deal with its own unique challenges such as electricity theft, but Chinese experiences could be taken as a reference to help the Indian government meet Modi's pledge to bring reliable power to all citizens.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn



Posted in: EYE ON THE ECONOMY

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