The National Thermal Power Corporation (NTPC), from obscure beginnings in the mid-1970s, has today grown to be by far the most dominant entity in India’s electricity generation landscape. It accounts for just under one-fifth of the India’s power generation capacity and for over a quarter of the electricity actually generated in this power-starved country.

These figures, while impressive in themselves, fail to convey the true impact of NTPC’s growing profile in the Indian electricity sector. A proper assessment of the same requires a long memory and a recollection of the chaos of the latter half of the 1970s when infrastructural sectors were afflicted by a sclerosis that threatened to paralyse the economy. Those were the days when the power sector simply failed to perform, because, as was said, the railways were not making coal deliveries on time. The railways, in turn, complained that the coal sector was not paying them even the highly concessional rate that had been fixed for hauling fuel to the power stations. The coal sector, in turn, pleaded inability to pay the railways because the power industry had not been paying them their dues, despite a vastly subsidised rate having been fixed.

Underlying this merry-go-round in the blame game was a problem of lack of efficiency within the power sector. Electricity generation, though under the `concurrent` list of the Indian Constitution, notionally allowing for both central and state government participation, was almost exclusively an activity under state government management at the time. The state electricity boards bore the grievance that they were not given equipment that would function with any degree of reliability. This problem was ascribed to the national development imperative of ensuring that all necessary equipment in the infrastructure sector would be manufactured indigenously.

A whole generation of power generation capacity had been commissioned in the country on the strength of manufacturing capabilities, picked up through technology transfer agreements with countries as various as Germany, Britain and the Soviet Union, not to mention numerous other countries of the eastern bloc such as Czechoslovakia. These capabilities were spread among manufacturing units in Haridwar, Bhopal, Hyderabad, Bangalore and Tiruchirapalli. Till NTPC came along as a big buyer and gave them an incentive to upgrade and standardise their manufacturing capacities, these plants essentially survived on budgetary doles and equally on political hyperbole.

Alongside the bewildering mix of technologies and capacities was an uncertainty about what the power sector required. Budgetary compulsions forced most state governments to opt for small-scale generation. The transmission and distribution of power remained fragmented with every individual state maintaining its separate network of grids, and the chronic situation of scarcity that all states experienced left them with little incentive to seek efficiencies through grid integration. Small and fragmented grids, in turn, resulted in the fragmentation of generation capacities. Here was another vicious cycle. Further, because there was no demand the power equipment manufacturers, such as Bharat Heavy Electricals Ltd. (BHEL), had little incentive to scale up designs and standardise their manufacturing base.

It was in this context that the idea of erecting a number of giant power stations close to coal pitheads cropped up. This manner of energy strategising, it was calculated, would minimise the cost of transporting fuel and take a major burden off the railways. However, it would obviously also necessitate greater investments in power transmission. This shift in focus was also in line with the direction of technological progress at the time. Railway transportation remained a stagnant technology whereas power transmission offered enormous scope for learning by doing. BHEL was then in the process of acquiring manufacturing capability in the realm of high-voltage transmission and many of the state electricity boards were beginning to learn the operational complexities involved.

Where did the idea come from? Perhaps, in all fairness, credit for the conceptualisation of the super-thermal power station located at a coal pithead would have to be shared between the technocrats, who were inducted into the central government in the 1970s, and the World Bank. Unlike today, when the World Bank and the International Monetary Fund seem pale shadows of what they were, when they seem at best fringe players in a world of finance where speculators have run riot, the so-called ‘Bretton Woods twins’ had considerable clout when it came to framing policy. Indeed, the soft loans extended by the World Bank played a major role in getting NTPC off the ground.

Over time, the growing presence of NTPC as a supplier of electricity in bulk to state electricity boards induced a sea-change in the mode of operations of these bodies. For one thing, each had to work in an integrated fashion with their counterpart bodies in neighbouring states and, hence, had to maintain certain specified technical parameters in electricity distribution. These could not be tampered with to suit the convenience of the moment, which had been the practice earlier, thus avoiding consequences that in the long term were damaging for power producers and consumers.

The second fallout was the payment discipline that was imposed on state boards by the compulsions of working with NTPC. For years together, the problem of overdue payments from the boards was tackled through ad hoc strategies of persuasion, negotiations and often through politically governed waivers. However, around the late 1980s, again under World Bank diktat, the Planning Commission began cutting back the allocations granted to states towards payment of dues to NTPC.

As the problem remained in some measure intractable, NTPC began cutting off electricity supply to defaulting states, inducing widespread blackouts. This was a tactic that no electricity board could quite resort to; in part because electricity supply remained a privilege for most at that time and there was no way that the privileged could be disturbed in their accustomed way of life. When NTPC began cutting off electricity supply to entire states because of their persistent payment defaults, the states concerned were forced to crank up their distribution systems in order to restore electricity.

Such a stratagem, indeed, would not have been possible for any entity that was too closely tied in with local politics. A state electricity board could never have punished defaulting customers through the large-scale restriction of power supply. This would have been contrary to the political equations under which the state government and, derivatively, the electricity board, were run. NTPC, though, managed to pull off the ultimate sanction against payments default only because it was relatively distanced from local politics. Even if it had to contend with the irksome attentions of whoever happened to be running the central government’s power ministry at the time, it could claim the superior moral sanction of the World Bank, which remained a major funder till, at least, the late 1980s, to bolster its case for cutting supply to defaulters.

NTPC, in this sense, goaded by the World Bank, served as an instrument of enforcing discipline. However, as a company with limited reach and ambit, it could not, obviously, ensure that these policies were equitably enforced. The dilemmas faced by a company operating in a political milieu in which inequalities enjoy an easy tolerance were illustrated in the recent unrest in an NTPC project site at Kahalgaon. Although located in close proximity to a major power generation unit, the residents of Kahalgaon have rarely enjoyed reliable electricity supply. When their irritation spilled out onto the streets in January this year, they invited on themselves the wrath of the authorities and four lives were lost in the resultant clashes.

At the time that NTPC began its phase of rapid expansion, it was popular belief that thermal power plants were preferable to the hydroelectric version because it involved fewer human costs. That was the time when the country was resonant with the debate over the Silent Valley project and its human and ecological implications. However, over time, with NTPC investing excessively in a relatively small tract of land—when three of its super-thermal plants, Singrauli, Rihand and Vindhyachal, came up in the tri-junction of three states around the Gobindsagar reservoir—it began to be apparent that thermal power plants too were not devoid of significant human and ecological costs.

By the late 1980s, propelled, in part, by the nationwide awakening around the Narmada valley projects, the World Bank itself brought human costs into its arid calculations of costs and benefits of the various mega-projects, it was all too willing to finance. The Bradford Morse Committee in 1992 sounded the monitory warning that the World Bank should stay clear of projects that did not involve a strong rehabilitation component for the communities that were likely to be displaced from the project area.

Under these multiple stimuli, NTPC itself introduced in 1993 a comprehensive rehabilitation and resettlement policy for the project-displaced. How well these policies have been implemented is, of course, quite another matter. In 1997, NTPC was confronted with a major challenge from the people of Singrauli, who alleged that all the promises made to them regarding compensation and rehabilitation had been violated. The turbulence abated after a while but it has, by no means, vanished. Indeed, these periodic disturbances in the settled course of NTPC, one of the country’s most successful public sector corporations, only illustrate the various dilemmas that confront even the most well-intentioned companies in a milieu of deepening inequality.