 Hello and welcome to NewsClick. Today we are going to be discussing the recent collapse of the power grid in North India and later in East and North East India. And to discuss this we have with us today Praveer Purkayastha, well-known commentator on NewsClick associated with the channel and who is also a power sector expert. Praveer, give me a little background as to why the grid collapsed. You see there are two sets of reasons which are being given. One is of course what the government is saying that there is a general crisis in the power sector that is overdrawed by various states and the other the real reason. Obviously overdrawals at a time which was the monsoons, the rains had already set in, it was raining that night, 2.30 at night on 30th July. It's completely unbelievable that they would have over withdrawals at that point of time. As I said by Punjab or Uttar Pradesh that's really not believable. What seemed to have happened was that there was a Beena Gwalya link and there are really two circuits on that and one of the circuits had been taken out because they are upgrading it to a higher voltage level, 765 kV. So therefore there was only one line operating on that corridor and the amount of power being transferred between the northern and the western grid seems to have been much higher than the capacity of the link. That link therefore collapsed that day and if that link collapsed it can have a cascading effect on the northern grid which it did. By the way this link has also collapsed earlier having caused cascading failures earlier that was in 2009 November and also according to the National Low Dispatch Centre itself on 29th of July there was what it calls a near miss. So there was a problem which seemed to have existed with a bottleneck of the transmission corridor that is one. The second part of it even when they knew that this problem existed it already surfaced on 29th of July. There is no reason why they did not take the step of reducing the intergrid transfers which they now have done after 30th and 31st grid collapses. So I think it is a set of technical failures which underlines this particular grid failures and also the fact that there are certain human failures of not taking steps in advance knowing that there is a particular situation developed. So let me ask you the average person would like to know the story about overdrawals seem to suggest that this is some unruly states being indisciplined and acting strangely whereas what you seem to be talking about is a problem in grid management. So who is responsible for the problem in grid management and how should that be tackled in future? You know there are two again two sets of issues of this one is that what is the nature of the grid and what is it supposed to do earlier the grid was supposed to transfer power from surplus areas to deficit areas. Now that did not demand a large amount of transfers of energy large amount of electricity transfers from one area to another. It was just the difference of what you had and what the other side needed that is all that needed to transfer that demands a lower order of capacity in some of the transmission corridors between grids. What has happened lately is that we have instituted this policy of what is called open access which is what the 2003 electricity act brought into being. With open access any utility any distribution company anywhere in the company can buy power from whichever generator sells it to him or her cheap. Now what it does is it changes the nature of the grid and then you are really trying to transfer large amounts of power across grids for what are called market reasons or open access for buying and selling. If you look at the US grid collapse which everybody is familiar with that also identify two reasons one is a weaker transmission network and half investments have not been made. And the second was that the market mechanism instituted in the United States less than even India had already seen large amounts of transfers of power which did not take place earlier. And therefore the grid really collapsed against the requirement which was not envisaged when it was originally built the same set of things here too. But coming to the issue that you had raised the second issue which is who is responsible for the grid. That responsibility of the grid originally existed with what is called the central electricity authority and the regional load dispatch centers for which there are four. Now unfortunately post 2003 electricity act the regional load dispatch centers have been brought in under the power grid and they have become a part of what the power grid cooperation or what is called the central transmission utility. And therefore they do not have regulatory teeth anymore and that is a problem because the cooperation cannot regulate independent bodies. And here again the philosophy is the markets will do what the regulator therefore says and markets automatically do not unfortunately act to set forth so to address a problem of this nature. So there are a set of technical problems associated with how with the ability to be able to transfer power in this way and perhaps more importantly there are these institutional problems. Given the new situation with the open access system what kind of measures do you think should be instituted in order to insulate the system from future such occurrences. You know Raghu I would really question whether we should have an open access policy at all because after all what we should really be looking as what are surpluses and deficits and try to really swap power across them. Why do I have to convert my grid to a marketplace which is not this purpose. So I think we need to really relook very seriously the open access issues because that means an investment in the grid of an order of magnitude higher than what we are envisaging which otherwise we would have to envisage. And do we really need to put in all that money for facilitating what is called a market. Do we really need a market for the power sector of open access policies because what it really means is transmitting large amounts of power for a few paisa benefit. And I think this itself is something we need to really question. Having said that irrespective of what mechanism is or is not in place we need to have institutions which can regulate the grid. And in that there is no question in my mind that the this whole regional load dispatch centers and the national load dispatch center should be separated completely from the power grid cooperation which is the mechanism which builds the grid. They are really responsible for putting in transmission lines running it and so on. But this regional load dispatch centers which decides really arbitrates between the utilities who distribute power and those who supply power. They have to be independent regulatory bodies and they should come back to what originally it was under the central electricity authority who should really be the grid administrator or what would be called the grid regulator. Now that is a physical task. It's a real time task. And if somebody is behaving badly as you said somebody is being naughty you have to first wrap him on the knuckles if necessary cut off his power. You know that's really what you need to do. It's a real time operation of the grid we are talking about and that needs an agency. It cannot be a public sector cooperation that is not its task. And does this require fresh legislation or can this be done through executive action currently? You know currently it can be done through executive action to restore what it was. But if you really want to give it teeth then you need to modify the 2003 electricity act. Because I think the 2003 electricity act has this hole in it that it does not envisage who will regulate the utilities particularly for the purpose of grid stability. It assumes that somehow it will automatically happen if a certain set of steps are taken. If you go back to the earlier era you had the state electricity boards. You had the regional electricity boards though were not legal bodies but they were really bodies formed out of the state electricity boards who coordinated their withdrawals supply and demand. And how to swap power surplus and deficit power. I think that was a much better arrangement than what it is now. Now we have what is called unscheduled interchange which is a market mechanism by which if the frequency drops you are allowed to supply more power than what you have scheduled. And if you are drawing withdrawing power then you get a higher penalty if the frequency drops that helps to regulate the frequency it has. But that is not enough. You really need more regulatory teeth and I think that's the kind of institutional mechanism we have to build. And I think at the end of it we can start with the executive act but probably we will have to look at the modification to the 2003 electricity act. An inquiry of sorts has been instituted to go into the grid collapse. First do you think this inquiry will produce any knowledge which will lead to action in the right directions. And secondly do you think any institutional changes are likely to result from this inquiry. You know if you look at what the response of the minister has been and the response of the government has been is very unlikely to lead to a change. The first thing that happens here is the power minister who causes who is responsible finally for the power department. The grid collapses twice or two successive days. He blames the states. He says I have done a fantastic job and gets promoted to the whole minister of the country. So we are sending a signal that actually grid collapse is not something which is an important issue and the minister is completely not responsible for what's happening on the ground. So that is one set of message we have passed. The government has been shouting from the rooftops and this is something the power grid also has been saying. That's over withdrawal, over withdrawal, over withdrawal. When they know cholly well that this is not true. So I think the fact that the government already pre-judges events says a certain set of things also means that's the direction they would like the inquiry to take place. So I'm very skeptical that it will be the independent real inquiry of the grid failures. I think we are going to come to see some things which sort of covers up what has really happened. Make some noises about the grid being little needs to be a little more stable and so on. But we'll certainly not examine the kind of issues we are discussing today. Finally, the issue of the regulatory structure or body that you've been speaking of. Over the last 10 years or more with liberalization of the Indian economy, there's more and more instances across the economy where so-called market forces are allowed to prevail and there is a very clear absence of regulatory authority felt. Do you think this is one more of these examples? I think it's absolutely true that this is certainly something that the markets cannot do. Markets cannot control the grid. The grid control is in milliseconds. So therefore the markets don't work and you need technical measures as well as human measures to see the grid is stable. But beyond that, I would like to really address the issue of what the power sector reforms have done and what market liberalization has done. We started reforming the power sector in the belief that the power sector is bleeding the statelics to boards of bleeding. In 1991, if my memory is correct, there was about 3,500 crores of accumulated losses in the statelics to boards. Five years into the reforms, those losses had gone to something like 12,000 crores. Now, after about 20 years of electricity reforms, apart from the Enron Fiasco and similar other Fiascos, now the accumulated losses of the power utilities is to the tune of 1,90,000 crores. 190,000 crores is the accumulated losses. So the power sector losses have increased ballooned through the power sector reforms. We have yet no analysis whether the reforms are in the right direction or we need a different set of reforms. I think the power grid collapses only one part of the crisis of the power sector. The power sector crisis is much bigger and if we don't address it properly, it's going to take the Indian economy down with it because A, it's a constraint, it's a huge infrastructural bottleneck. B, there is roughly about 400,000 crores of debt the power sector utilities have with the banks and the entire financial sector will collapse if we do not address the problem. Thank you very much.