My thought bubble, Telangana Power Corporation (TPC)

  • October 28, 2014 2:05 pm

By Mallikarjun Bandyala

Power generation in public sector, if taken seriously and finish building projects on time will have tremendous benefits in empowering its poor and middle class. Telangana could follow French model of investing part of its future surpluses in establishing key public and strategic services companies and successfully running them. France not only has most public sector companies among western nations but also made them technologically one of the most advanced in the world. The latest example of that being is new generation of largest super critical nuclear reactor being deployed in China by Areva of France, first of its kind mankind has ever known to. What my point here is that only government can subsidise the energy nobody can. So to manage high energy costs, at least one form of energy which is electricity should mostly be in the public sector.

I have been going through few successful state owned enterprises around the world, I found France’s EDF Électricité de France S.A.(EDF; Electricity of France) is a very interesting and could be an example in many ways for TPC. Its largely owned by the French government, with €65.2 billion in revenues in 2010, EDF operates a diverse portfolio of 120,000+ megawatts of generation capacity in Europe, South America, North America, Asia, the Middle East and Africa. EDF is the world’s largest producer of electricity. In 2011, it produced 22% of the European Union’s electricity, primarily from nuclear power. Its customers are 37 million worldwide in 2010 and turnover of €63.34 billion (ONLY 23% from France) €41.82 billion in 2002. The growth from 2002 to 2009 is telling in numbers.

EDF was founded on 8 April 1946, as a result of the nationalisation of around 1,700 smaller energy producers, transporters and distributors by the Minister of Industrial Production. It became the main electricity generation and distribution company in France, enjoying a monopoly in electricity generation, although some small local distributors were retained by the nationalisation. This monopoly ended in 1999, when EDF was forced by a European directive to open up 20% of its business to competitors. Until 19 November 2004, EDF was a state-owned corporation, but it is now a limited-liability corporation under private law, after its status was changed by statute. The French government partially floated shares of the company on the Paris exchange in November 2005, although it retained almost 85% ownership as of the end of 2008.

Interesting to note in the EDF case is that Government of France was never interested in privatizing strategic asset like EDF. It continue to control it fully amidst the all the talk of globalization and competitive private sector. At the same time they have built the company into a global entity that has gained the expertise and know how to build, maintain and distribute the power across the globe, earning very important income for the state. We should realise by now that apart from french revolution, France has lot to offer in modern economics too. It has great niche companies that excel both in technology and efficiency.

If a country like France with only 66 million population could create such an industrial behemoth why not Telangana with 45 million of its own population and another 1100 million at its door step or has the access to. Anyway we have to think very hard to make future plans for Telangana, we might as well think big and work hard for it. It should leave our our national standards behind and look to achieve global standards. With careful planning and motivation we can make this possible and make our current and future generations reap the rewards from it.

It may be very easy to create state owned companies for the governments but its not always envisioned with a bold plan. Initially TPC could be set up by pooling all of the Telangana’s state owned power generation and distribution assets and immediately set up on plans to increase its electricity generation capacity while receiving all the help it can get from the Center. It should take advantage of the Godhavari valley with its proven coal reserves. It has to acquire all the knowledge and know how from the initial integrator of the plants. It has to have its own R&D, plant building and maintenance to have the control over competition from corrupt and uncompetitive businesses in power generation. TPC may be our only way standing up to these companies. We have to enhance R&D and other capacities by continually seeking opportunities beyond our state borders to retain the first class talent and R&D.

We may not have all those energy resources as a middle eastern countries have but we should never lack ideas. TPC should come forward and join hands with BARC (Baba Atomic research center) scientists and see if they can build a thorium reactor in Telangana. Thorium is believed to be the safer than uranium. In the event of disaster thorium reactors do not spread radio actives. Research so far shows its a relatively a much safer and sustainable as India has its reserves in huge quantity. It needs lot of political capital and determined leadership. Recently a small commercial reactor is sanctioned by govt of India.

TPC has to earn the name for the quality in building a traditional, renewable and modern hybrid systems. It may sound like far fetched but I personally think its truly achievable. We have all the demand that we can imagine of, power sector in India alone has unlimited opportunities to this date and beyond. All we need is a determined political leadership, and a leader who can sell this positive message to the public and spell out a bold plan for not only for our energy security but also tap into the concept of earning the income beyond our state borders through a state-owned enterprise. It has all the positive side effects from this spin-off. We will have uninterrupted wheel of growth and political stability as we have lot to catch up in this regard. We will also get rewarded with the eco-system that is usually get built by private individuals, SME’s and subcontractors working for or providing services to TPC projects. It will generate positive vibe in our economy in a sustainable manner.

Funding would not be a major problem at all for this as its public bonds will be guaranteed by state government and eventually get endorsed by government of India. Foreign and domestic markets will literally pour in the money. We have to create water tight system of accountability and reporting regime for TPC at the same time keeping it in arms length from government’s day to day operations. It must have the complete operational and economic independence. Basically government nurture it like a baby in initial stages and limit itself to advises in the medium term and leave it on its own in the long term. In the worst case scenario, if things get harder financially/technologically for TPC, we can partially float it in the market but strictly keeping 85% with the state. French earn foreign $$$ thorugh EDF, I know it took them decades but the current generation of France are reaping rewards from the efforts of it past generations. Thats what happens in developed and mature societies. I aspire Telangana to become one.

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