Ministry gets a dose of perestroika

PRIME Minister P V Narasimha Rao has approved a plan to restructure the Union ministry of nonconventional energy sources (MNES) to improve efficiency and meet targets. The new structure will also see greater private-sector involvement.

MNES is presently structured along technology lines, which result in similar end-use applications being handled by separate departments and one department often handling technologies that have different end-uses. The ministry will be reoriented according to end-use applications and a horizontal integration of various technologies.
Ready-made programme As part of the reorganisation, the Prime Minister is reported to have also cleared a move to transfer the Integrated Rural Energy Planning Programme (IREP) from the Planning Commission to MNES. Experts point out that by taking over IREP, minister of state for nonconventional energy sources S Krishna Kumar has acquired a ready-made programme propagating the use of nonconventional energy devices in rural areas. MNES officials argue IREP's well-developed infrastructure at the state and district levels can boost MNES' rural energy component.

Says Krishna Kumar, "The aim of the reorganisation is to impart a sense of dynamism to the official alternative-energy programme. It is meant to help the ministry generate 2,000 MW of electricity from nonconventional sources by the end of the Eighth Plan." Kumar points out total power generation in the nonconventional sector during the past decade amounted to only 200 MW. "If we generate 2,000 MW, if would be a revolutionary achievement," he added.

The minister says MNES has been handicapped by poor allocation of funds. The Planning Commission had recommended Rs 6,900 crore for this sector in the Eighth Plan, but only Rs 857 crore was allocated.

MNES will now be allowed to solicit private-sector funding and look for multilateral finance, plans for which are already being prepared. Kumar proudly points to a World Bank grant of $195 million and additional funding promised by the Global Environment Facility.

The restructuring of the ministry is expected to facilitate optimum use of the large volume of funds that MNES hopes to acquire. Explains MNES secretary Louis M Menezes, "We want to develop the market for nonconventional energy technologies with the active participation of the private sector." The fiscal incentives for the private sector will include tax holidays, depreciation allowances and remunerative prices for electricity. The ministry will also increase its budget for technology demonstrations and workshops and provide industrial loans through the Indian Renewable Energy Development Agency.

However, private nonconventional energy equipment manufacturers are sceptical about the changes. Says Rakesh Bakshi, director of Vestas-RRB India Ltd, a Delhi-based manufacturer of wind energy equipment, "We have to see how MNES cuts its red-tapism and interacts effectively with industry."
Loose ends B C Jain, who heads Ankur, a Vadodara-based organisation that propagates the use of alternative energy devices, feels the reorganisation "will still leave loose ends." He points out several industrial groups have shown interest in biomass gasification for captive power generation, but biomass utilisation has stayed in the purview of the rural energy group, which deals with cooking fuel.

Some experts also point to the lack of fresh thinking on MNES' poor equipment maintenance, which has been the bane of the nonconventional energy programme. However, Kumar argues, "With the entry of the private sector, plants will no longer be set up merely to fulfill targets -- maintenance can also be ensured." Clearly, business considerations are seen as the panacea for most, if not all, nonconventional energy sector problems.