Opinion    
Strategy for Rural Electrification-2
by Dr. Anil K. Rajvanshi

Similarly there is also a suggestion in some quarters that the model should be based on a cooperative. However the cooperative model especially in the sugar sector has been thoroughly discredited and hence may not be a fit model to emulate.

The author has proposed that the major corporate leaders in the electricity area like Tata Power, Reliance etc. should enter this field. They have the managerial and technical expertise required in running such MCs. They can take a lead in initiating few projects with the help of local NGOs so that the corporate, NGO and Government partnership can be fostered. If a few projects are successful, then they can be replicated all over the country by a franchising mechanism.

For existing private power companies the MC concept also makes good business sense. Each MC will cost about Rs. 35,00,000 and with about 20000 villages being identified by Government of India as totally unelectrified, a business of about Rs. 7000 crores for these companies can be generated.

4. Policy issues
To foster corporate, NGO and government partnership, the following issues have to be addressed :

a) The capital cost of the plant should be either heavily subsidized or loan for it should be available on very soft terms. Government of India has recently started a scheme called Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) which provides 90% capital subsidy only for villages which are not electrified. However for real rural electrification to take place it is necessary that this subsidy should also be provided in villages which get equal to or less than 8 hours of electricity. After all the capital cost of such projects is about 1/6th that of the big power projects (500-1000 MW capacity) and hence the capital subsidy can really help the government’s efforts in rural electrification.

b) Depending upon the fuel used the cost of electricity from such MCs may vary from Rs. 5-20/kWhr. For fixing tariffs, all such utility companies are supposed to approach MERC as per 2003 Electricity Act. We feel that a blanket policy should be made by MERC that all such MCs, which are going to produce power, equal to or less than 500kW in rural Maharashtra should be exempt from tariff structure of MERC. The local NGO, villagers, and the promoter can fix this tariff in an amicable way. Few initial projects may however be able to operationalize this concept.

c) If the MCs use only renewable energy for generating electricity then they may be given further soft credit for leasing MSDCL infrastructure.

Finally it should be pointed out that India Inc cannot prosper if rural India lags behind. Without economically viable rural industries, the whole country will remain backward and electrification of rural India is the first step in that direction. Thus this provides an excellent opportunity for Indian corporate sector to participate in nation building by building the rural electricity infrastructure. That was the dream of Mahatma Gandhi and I am sure that is the dream of every Indian. 

January 15, 2006

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