J&K’s Energy Sector: A Vital source of Future Economic Growth

J&K's Energy Sector - A Vital source of Future Economic GrowthJ&K can become a major energy producer provided there’s proper management of our hydropower resources

The Jammu & Kashmir State is blessed with sizeable resources which, if suitably harnessed on priority, could transform its economy and bring socio- economic development not only in the state but in the whole region.

Among the major natural resources, water as a resource forms the base for its hydroelectric power and has strong potential to generate as a critical input not only for its economic activities but also as a large source of state revenue.

Energy, as an input available adequately has multiplier and trickledown effect, thereby, would give flip to the other sectors of the economy in the state. Since, the other sectors of the economy like agriculture are not strong enough to provide large revenue to the state, therefore, it becomes imperative for the state to look at this sector as a vital source for future economic growth and development. The other promising sector of the state i. e., tourism, is highly dependent upon the overall circumstances. Hence, a comprehensive strategy is required to harness the hydropower potential available in the state and take benefits which otherwise goes waste. Notwithstanding the fact, the broad vision behind the energy policy of the state is to meet the demand for energy services of all sectors in a comprehensive and comfortable way. While providing energy to the households, care must be taken of the vulnerable section of households living below the poverty line.

Significantly, any region blessed with energy potential will have to harness the given resources which otherwise goes waste and become the cause of socio- economic backwardness. Jammu and Kashmir State, which is rich in hydroelectric resources – an environmental friendly energy source, is suffering from basic energy requirement.

The State, although bestowed with substantial water resources with the capability to power crunch. Out of this large potential 16,475 Megawatts have been identified as economically and technically feasible. Currently the State is able to harness only about 17.0% of this potential with a total installed capacity of around 2813.46 Megawatts, out of which more than 2009.00 Megawatts are under Central ownership and control, leaving only about 27%, i. e., 761.96 Megawatts with the State sector and only 2.0% private sector i. e., 42.5 Megawatts. Adding share from Central projects, the total electricity available to the State falls short of the requirements. The shortage of this critical input is also reflected by the State’s industrial backwardness and low socio- economic conditions. To meet its restricted power demand of 10370 Mega Units, the state power projects generate only 1692.5 Mega Units. It is pertinent to note here that if the energy economy of the state is allowed to operate to its fullest potential, the state will not only become energy self- sufficient state but would also add largely to northern grid which would become available to States in need of these resources.

With the proper management of hydropower potential, the state could become a major energy producer in the region supplying electric power to northern India, and also could reach to the neighbouring energy deficient country of Pakistan.

Presently, the State is forced to purchase considerable amount of power from the northern grid and suffers substantial drain of its resources on this account. No doubt, Centre has made commendable efforts through NHPC to harness the hydroelectric potential of the state but the approach adopted ( 12% as royalty) was not state friendly.

On the per capita power consumption bases, the state of Jammu & Kashmir is lagging behind not only rich states of Punjab ( 1527KWh), Haryana ( 1222KWh), Delhi ( 1651KWh); but even neighbouring and hilly states of Himachal Pradesh ( 1117), Chhattisgarh ( 1547KWh), and Uttarakhand( 1112KWh). Importantly, out of the total power demand 18562.0 Mega Units, power generation from the State owned power projects is only 3927.7136 Mega units( in 2015). With modernization and urbanization, there has been sharp increase in the energy consumption and on the per capita basis, the power consumption in the State has increased and reached to 552.66 kWh in 2002 to 993.04 kWh in 2015, showing an projected to increase in power requirement of the state from 9640.0 Mega Units in 2004- 05 to 21887.0 Mega Units in 2021- 2022.

Although, the State is fairly electrified with 97% of villages, but providing continuous power at cheaper rate is difficult. In order to minimize the demand- supply gap, the State intends to generate 7,500 Megawatts as solar power with a capacity of 5,000 Megawatts in Ladakh and 2,500 Megawatts in Kargil. Ladakh possess the potential of 30,000 Megawatts of solar energy. Also to meet the restricted requirements of energy during winter, when there is drastic reduction in river discharges, the state should bank power in summer and receive back in winter which could save the state from long blackouts. Keeping in view the current pattern of energy consumption, energy efficiency would make the state able to save a considerable share of its energy resource which otherwise go waste and give rise to the problem of carbon- emissions and harm to the environment of the state.

Obviously, the J& K is the storehouse of hydropower that can improve the lives of the region’s residents, and can provide energy for economic growth to the whole region. However, it has been observed that in J& K State, cumulative causation ( causality) runs from energy consumption to high level of economic activities and mutually persuades each other as per the given model;. . Ä y t = 1.01 Ä inpt+ . 3.73 Ä enrg . t + . 0.27 Ä k t + . 0.97 Ä l t + 0.11 Ä trend- . 0.91Ecm . ( t– 1) Because the coefficient of energy ( 3.73) has been relatively high as compared to the coefficient of labour ( 0.97) and capital stock ( 0.27), implying that energy plays a dominant role in the process of development in the short- run. The error- correction coefficient (- 0.91) is negative and is significant supporting the evidence for the existence of long- run causality between real output, energy consumption and other factors entering in the model that the causality is running from energy consumption to real output which means that the elasticity of GDP to energy consumption in J& K is very high.

Given the estimated hydropower potential, of which only 16,480 Megawatts have been found technically and economically feasible, the fullest capacity utilization of this sector is likely to give boost the state economy directly and indirectly in a variety of ways. As such if the whole hydropower potential of the state can be utilized in a rate of Rs. 1.70/ Kwh per unit ( in the category of domestic consumers) gives Rs 22,33,80 crores.

Accordingly, at the rate of Rs. 3.2/ Kwh per unit ( in the category of Industrial consumers) could contribute Rs 420,480 crores. Taking as a whole both the categories ( domestic and industrial consumers) could contribute Rs. 643,860 Crores to the state economy annually. Importantly, from the realized( installed) potential, the state economy obtains Rs 18,400.9275 crores in the category of domestic consumers ( i. e., 10,8240.75 MUs @ Rs. 1.70 per 1U = 108240.75* 10 6 ×1.70 = Rs.

184009.275* 10 6 = Rs 184009275000 = Rs 184009.275 million = Rs. 18,400.9275 crores) and in the category of industrial consumers Rs 346,37.04crores ( 10,8240.75MU @ Rs. 3.2 per 1U = 10,8240.75* 10 6 ×3.2 = Rs. 346,370.4* 10 6 = Rs 346,370400000 = Rs 346,370.4 million = Rs 346,37.04crores). Taking as a whole ( both the domestic and industrial consumes consumers), the total revenue generated from the realized potential is Rs. 53,037.9675 crores. As such this sector could help in generating more employment opportunities and accordingly will boost the share of GSDP of the state. In this way the energy sector of the state seems to be a promising sector which could save the economy from catastrophes for all times to come.

However, energy dearth is an indication of insufficient capacity generation and inadequate transmission and distribution networks as the state has witnessed the maximum energy shortage of approximately 26.59% with 52.66% of T& D losses which is higher than the average national per capita power consumption. Especially Delhi has witnessed the lowest energy shortage of 0.3% with low percentage of T& D losses of around 22%. Besides, due to Indus Water Treaty, state is losing Rs. 6000 crores annually ( since last 70 years, the state has lost 42,0000 Crores) due to lean discharge of the rivers, thereby deficit in supply in relation to demand surge up. Reforms in the energy sector, for making it efficient and more competitive, are the need of the hour. While there has been some progress during the recent years, shortage of energy and lack of access continues to be a major constraint on economic growth. The persistent shortages of electricity indicate the need for improving performance of the energy sector in the state.

In order to cross the breakeven point and to build the power sector on sustainable bases, the power planning, modified policies and enormous investment needed to avoid the energy wastagen- energy brownouts by applying the modern technological knowhow to build- up new dams, installation of wind power plant to explore the energy production. Moreover, policy orientation needs a drastic modification to utilize endogenous natural resources of the economy especially water. Besides the energy sector development, the state should also take care of labour force up- gradation through changes in labour composition and acceleration of capital formation and should take necessary measures to utilize cheap and surplus labour in most efficient way in the process of development.

Finally, the state may pursue energy conservation policies in such a way so that these policies may not produce any adverse effects on economic growth in near future. In order to streamline the sector, the state should take following points into consideration: a) Rules- n- regulation should be framed in such a way so that the people may happily follow such rules, but keeping the vulnerable class of the society ( poor section of the society) into consideration; b) Formulate a mechanism whereby the departmental employees are assigned the responsibility of realizing genuine electricity charges of the power supplied to their catchment areas; c) The households consuming power illegally need to be identified, booked and brought under the department’s registration network; d) In order to minimize the transmission and distribution losses, the state government needs to use cable transmission lines across the state at large scale; e) The State must focus on construction of mini hydel projects and harnessing of solar energy. State must run awareness campaigns for efficient and judicious use of energy and other sources of environment friendly resources; and f) Also a satellite based and real time telemetry system should be installed at a minimum of 93 locations for monitoring power theft.

Dr. Mohammad Ibrahim Wani (ibrahimwani@ gmail. com)

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