India's Infrastructure To Blame For Mass Blackouts

Audie Cornish talks to Kalpana Kochha, chief economist for South Asia at the World Bank. They discuss India's energy crisis and how the country can improve its infrastructure.

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AUDIE CORNISH, HOST:

We're going to spend a few more minutes on this massive blackout and focus on the question now on the minds of 600 million Indians: Why, with its thriving economy, is their nation's power grid a shambles? For answers, we're joined by Kalpana Kochhar. She is chief economist for South Asia at the World Bank. Welcome, Kalpana.

KALPANA KOCHHAR: Thank you, Audie.

CORNISH: So give us a snapshot of India as a nation of electricity consumers. I mean, 1.2 billion people, what are their energy demands and how quickly are those demands growing?

KOCHHAR: Growing - India is, compared, let's say, the U.S., there's three times as many people. But the U.S. level of consumption is much higher than India. But where India beats the U.S. is on the growth of consumption. Energy consumption is forecast to triple from the late 1990s and double from the current levels. Its middle class is growing, you know, buying more appliances, cars, everything that demands energy.

CORNISH: Now, I've read that between a third-and-a-half of the electricity generated in India, though, is lost before it even reaches its destination, reaches these consumers. How is that possible?

KOCHHAR: Well, at its peak, it's about a third - you're right - that's lost. Some of it is technical losses, and this is poor infrastructure, the fact that the transmission lines are not of the right voltage and right gauge to transmit electricity without these technical loses. But a large part of it is what is called leakage, which is, in other words, called theft. It's basically people illegally drawing power and, therefore, not paying for it. So some of it is financial loses as in just power that's unaccounted for.

CORNISH: We're hearing from our reporter Elliott Hannon that many Indians feel that their politicians simply aren't investing in the power grid. I mean, is that true given what you've told us about sort of where the power is going?

KOCHHAR: As of the last five-year plan, considerable amount of new energy-generating capacity was put in place. So the problem is less about the infrastructure to generate power. The problem today is actually the fuel to run the generating capacity. So three quarters of India's power comes from thermal, coal-fired power, and basically, there just isn't enough coal to fire all the power generation capacity that has been in place.

CORNISH: And I understand that in an effort to tighten environmental standards, the Indian government has slowed the number of permits its issuing for new coal mines, right?

KOCHHAR: Yes, that's certainly true, and there's also issues related to land acquisition. But there is an agreement that the generation companies have had with Coal India for fuel supply. They're called fuel supply agreements, and these agreements are not being fulfilled at the moment. So the irony of the situation in India is now that you have the private sector, which has stepped up to the challenge of putting in place generation capacity, but the public sector monopoly, which is the - monopolizes the supply of coal, the main fuel, is not basically fulfilling its end of the bargain.

CORNISH: So going beyond the energy issue, I mean, how big of an obstacle is this to India's economy?

KOCHHAR: India is expecting - the labor force of India is growing by something like 800,000 people entering the labor force every single month. And we've done work in the World Bank to show that the number one obstacle to creating jobs in India and actually the rest of South Asia is energy. So this is not just about frequent shortages that are affecting people and the kinds of stories that you're seeing in the news. It's about job creation that has significant short- and medium-term consequences for India's growth trajectory.

CORNISH: Kalpana Kochhar is chief economist for South Asia at the World Bank. Thank you so much for talking with us.

KOCHHAR: Thank you, Audie.

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