Indian cities offer free entry to all citizens, unlike China where urban access is controlled by a permit system- the Hukou. Free access for citizens aligns with the "one nation principle" but unanticipated in-migration compromises the quality of urban services.
An assessment of the "ease of living" across the largest 101 cities recorded an unspectacular but realistic average score of 53.5, on a scale of 100 (MoHUA 2020). Global rankings are even less flattering with the best Indian cities at the bottom.
Governance deficit with limited revenue, management capacity, or functional mandates is a major constraint. The 1992 constitutional amendment, which recognised local bodies as the third rung of government, makes them dependent on state government largesse.
City leaders consequently have lower political capital than state-level leaders. Shared mandates for urban planning, governance, and service delivery across multiple autonomous entities lead to low accountability and poor customer service.
The marginalisation of city governments sits uneasily with India's near-term green growth ambitions and its longer-term net-zero emissions (NZE) goal.
Two-thirds of GDP is already generated by cities. Their economic dominance underlines their importance in innovation, attracting talent, creating "good" jobs, leveraging sustainable development, and "green" growth (World Cities REPORT 2020).
The growth expectations from cities cannot be realised without a robust, high-quality, green electricity supply system. This is why globally, by 2050, electricity will comprise 49 per cent of the total energy consumed as compared to 20 per cent presently (IEA 2021).
More than half of the Indian population will live in cities by 2050 relative to less than a third in 2011. Greening electricity supply, enhancing energy efficiency, and electrifying surface transportation will be growth drivers and together abate around 40 per cent of carbon emissions. This aligns with India's plans to target a renewable electricity capacity of 450 GW by 2030.
Investments in electricity distribution and supply systems must be stepped up to match the population growth of over 60% by 2040 - an additional 270 million people.
Presently, cities suffer supply interruptions of up to 2 hours or more per day, except in Gujarat and Kerala (CEEW 2020). Global companies consider electricity supply as a key input as evidenced by Amazon's regulatory filing highlighting business risks, "our computer and communication systems and operations could be damaged or interrupted by fire, flood and power loss".
Low quality of supply constraints investments and locks capital in inefficient backup systems. Underground distribution is a technical intervention to improve quality and reduce losses. The fourth report by the Standing Committee on Energy (March 2020) quotes Secretary Power noting underground distribution as the "ideal but expensive approach."
Privatising city electricity supply, although politically challenging, can be another way to improve the managerial incentive for achieving higher levels of efficiency and supply quality.
But a less disruptive option is to unbundle retail supply from the wires business at the city level. Unbundling bulk supply from transmission in 1990s and vesting the national transmission grid in a Union government-owned power grid company (now POWERGRID) worked well.
The Electricity Act 2003 applied this template to unbundle state-level grid management from supply. A similar unbundling of distribution wires from retail supply, coupled with joint ownership with the city administration, could be implemented for large cities with their population exceeding 0.5 million.
Such a move will enable the NZE pathway by aligning energy and urban planning, enhance green livelihoods by increasing productive investments and reduce the cost of capital by improving productivity.
Public investment should remain focused on transition issues like dealing with the stranded cost of high carbon intensity generators due to tighter emission standards in the future or the planned expansion of an efficient city distribution network.
Retail supply, metering, billing, and payment collection can be transferred to licensed private entities and aggregators to unleash competitive forces by operating, preferably through well-regulated power markets.
Efficient electricity supply infrastructure is the lifeblood of a modern urban economy. It boosts access and the quality of education and health services, public security, communications, e-commerce, and transportation.
Encouraging cities to share the managerial and fiscal burden for securing fail-safe city electricity supply is a natural extension of city management.
Creating a special purpose vehicle, on the "smart cities corporation" template, to assume charge of city electricity supply is one option. Shared ownership by the municipality of city electricity services, in PPP mode, will link city governments organically to the need for enhancing the efficiency of supply.
Partly owning the electricity utility will enhance the range of utilities managed by the city administration, promote integrated utility planning and management, enhance economies and improve the delivery of services, as is evidenced by the case of Chandigarh.
In most other jurisdictions, city power development is an external and residual action to be completed by the distribution utility once the city development plan is finalised.
Most importantly, owning electricity distribution will create a vested interest in minimising carbon emissions via enhanced access for city finances to the growing volume of ESG funds for green infrastructure.
New York City's modeled pathway to NZE 2020-2050 costs $2 trillion for a population of 9 million. Ours is sure to be expensive but not by as much. After all, we emit only one-tenth of the carbon emissions per capita as the US and one-fourth per capita as China and our NZE pathway stretches farther than either 2050 or 2060.
(Dr. Gaurav Bhatiani is Director, Energy & Environment, Research Triangle Institute (India) and Sanjeev Ahluwalia is Advisor, Observer Research Foundation.)
(Views are personal and do not reflect the position of RTI or ORF or their clients and partners)
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