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Daphne Wysham

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One Reason Behind India's Blackout: World Bank Policies and Neoliberalism

Posted: 08/02/2012 6:06 pm

Half of India's population -- one-tenth of the planet's people -- lost power completely this week, with a blackout covering most of north India's highly populated states. What was the reason for the blackout?

While pundits and politicians postulate on the reasons for the power failure, one answer is clear: an ideology of neoliberalism foisted on India by the World Bank and IMF was partly to blame for the blackout.

It is not the only cause. Climate change has clearly played a role in India's blackout: A delayed monsoon season meant lower water reservoirs and higher rates of water siphoning for agricultural purposes rather than power production. This could have been foreseen by the Bank back in the 1990s when climate change was clearly viewed as a problem to be dealt with. Nevertheless, the Bank pushed large hydropower projects in India, ramping up debt, while resettling millions from fertile land near riverbanks.

Meanwhile, India's biggest and dirtiest source of power, coal, providing over 70% of the country's power, is increasingly hard to come by. This, too, was something the Bank could have foreseen; yet instead it pushed coal power dependency aggressively in India. There is less and less land available for open-pit mining, deemed more "efficient" than underground mines by the World Bank. The reason for its "efficiency"? Underground miners were once one of India's most powerful unionized labor forces. While their jobs were dangerous and dirty, they provided a decent living, and their underground mining prevented the widespread environmental and social destruction that open-pit mines ushered in. At World Bank's behest, however, open-pit mines replaced thousands of underground mines, and miner's unions were busted and replaced with a handful of workers driving large dump trucks. Efficiency gains may have been achieved, but at what cost?

Open-pit mines are literally hell-holes. They smolder in a constant state of combustion. They ravage the landscape, and cause acid drainage, which kills fish and makes the water unsafe for drinking or bathing. As with large dams, thousands of India's poorest tribal people have been uprooted to make way for open-pit mines and placed in resettlement camps where prostitution and alcoholism are endemic. The World Bank once claimed they would provide an acre of land for every acre taken from the most marginalized tribal peoples to make way for mines and dams. But that promise was long ago watered down, then forgotten. Ironically, many of the tribals remain without power to this day. The poorest of the poor the Bank claims to serve got the shortest end of the stick.

Add to that the fact that India's coal is heavy in ash content, and population pressures on available land means ash disposal is also a problem. So, often, the polluting ash -- with heavy metals and radioactive elements -- is merely dumped in the already polluted rivers.

As India runs out of space for open-pit mines and ash disposal, it's increasingly turning to coal from abroad -- which comes with lower ash content but at a higher price. All of this could have been foreseen by the World Bank and IMF back in the mid-1990s. They were urged by groups such as ours to move toward solar, wind and other renewable energies in India -- both in the interest of providing power to rural areas more cheaply and averting a climate disaster. And they were even urged by their own hand-picked "eminent person," Emil Salim, a former board member of one of Indonesia's largest coal companies, who headed up their three-year Extractive Industries Review, to get out of coal completely by 2008. The reason? The poor were "worse off," not better off, Salim determined, as a result of the World Bank investments in coal. Nevertheless, the Bank continued to provide billions to one of the most polluting of fossil fuels, while ignoring its climate impact.

Corruption certainly has played a role in India's power failures for decades. At every step in the supply chain, money is siphoned off, resulting in a shoddy system- from backup systems to warning systems to good cables. Currently, good cables intended for transmission get sold and shoddy materials put in their place.

Electricity theft is also part of the problem, but simply identifying the problem as "theft" -- as many do -- rather than recognizing that people deserve access to electricity, minimizes the social and economic reasons that drive people to frustration to the point where they feel they have a right to steal power from the grid. Despite massive loans, debt, and the poorest paying for the power with their land or their lives, one-third of India's households do not have enough electricity to power a light bulb, according to last year's census. And so they steal it. And in stealing it, they increase energy inefficiency, by often grounding the wire they have hooked up illegally to the grid in the soil, thereby losing more power.

Ironically, one region that did well during the power crisis in India was Jodhpur, where, after a brief interruption, the windmills kept hospitals and households powered up while half of the country went black. Were the World Bank to have pushed a model, such as that successfully employed in Germany and other countries, where a "feed-in tariff" -- a guaranteed rate of payment for energy fed into the national grid- for renewable energy had been put in place, small farmers and others in rural areas would be able to both provide power to the grid and earn money in doing so. But instead, they foisted on the largest democracy a neoliberal model -- where unions were busted, power was privatized, people were treated like pawns on a giant chess board, while they targeted the affluent and heavy industries first for energy delivery using some of the most environmentally destructive energy resources on the planet. The assumption: energy services would eventually trickle down to the poor. Nearly two decades later, after billions in investment, one-tenth of the world sits in the dark, the planet is rapidly heating up, and the only thing trickling down to the poor is contaminated water or, if they're lucky, enough water to keep their parched crops alive.

 

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Half of India's population -- one-tenth of the planet's people -- lost power completely this week, with a blackout covering most of north India's highly populated states. What was the reason for the b...
Half of India's population -- one-tenth of the planet's people -- lost power completely this week, with a blackout covering most of north India's highly populated states. What was the reason for the b...
 
 
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02:30 PM on 08/09/2012
Well, I did work in the electrical generation industry for 23 years. Much, but not all of what Daphne notes is true, and it's certainly true about the role of the IMF.

[Where Daphne goes out of her expertise is the description of the grid itself and the issue of those that steal power 'grounding' a line which increases "inefficiency". This is...crazy and she needs to really look up the purpose of grounding and why grounding the wrong phase in a 3 phase circuit will only trip supply or burning up the wires...another time perhaps]

Where I disagree with her most profoundly after she exposes the malevolent role of the IMF in India's energy is actually over the issue of coal it self. Coal is bad for *part* of the reasons she noted but it had almost nothing to do with the grid failure/black out. This was *wholly* a political and technical problem where they've given state gov't the "right" and the technical ability to bypass system operations. Nothing like this exists anywhere in the world. The grid operates based on regional loading and should have built into it the ability isolate and blackout offending areas *without a human* involved whatsoever. It seems their whole energy distribution paradigm is an issue.

I'll leave her position on renewables for another time.

David Walters
07:37 AM on 08/05/2012
Interesting read.
HopeWFaith
We the People
02:48 AM on 08/04/2012
I know we're all headed down this dark pit of energy failures if we do not demand clean energy. All of us must speak up on this. It's going to take a massive voice to be heard and effect a change in leadership actions. But if the voices are large and loud enough, persistent enough, we can make this change. We just have to have the attitude, this is life itself on the line. Take action. Speak up. Be consistent, and NEVER GIVE UP!
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Daphne Wysham
Fellow, IPS
11:32 AM on 08/05/2012
Hear, hear!
10:59 PM on 08/03/2012
Unfortunately for India, most of its economists are armchair intellectuals, whose greatest ambition is to get a posting at the World Bank. They have become steeped in the culture and philosophy of this organisation, and cannot think out of the box which is the need of the 21st century. The PM and the Planning Chief have both done stints at the World Bank and almost all the economic advisors have had connections with this body. Domestic politics is also responsible for this mess. Gujarat is surplus in power because its
Genders
Love, Tolerance, Enlightenment
10:21 PM on 08/03/2012
Neoliberalsim is just conservative plutocracy.
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Paul Stacey
Kill guns, not children.
09:35 PM on 08/03/2012
Well said.
07:36 PM on 08/03/2012
According to estimates, roughly one-third of a billion Indian citizens were left without power Wednesday after workers successfully repaired the nation's electrical grid and brought all of its systems back online. "Since restoring our infrastructure to 100 percent capacity following Monday and Tuesday's blackouts, vast swaths of India are now completely without access to electricity," said the country's power minister, Veerappa Moily, who confirmed that three out of every four residents lacked access to such basic amenities as lighting, food refrigeration, and the use of simple appliances now that the country's grid had fully recovered. "We are currently not monitoring the situation, as everything appears to be functioning normally again in India." Government officials also stated that the widespread power outage had in no way compromised their ability to provide adequate sanitation to 31 percent of India's citizens.
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mrinaliniv
05:52 PM on 08/03/2012
I just read the article, well written, but Emil Salim is the only one you quoted. What are your sources. You make a lot of comments, but no references. Not okay.
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Daphne Wysham
Fellow, IPS
12:51 PM on 08/05/2012
I will see if I can add more links. Also, see my response to the comment below.
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mrinaliniv
12:22 AM on 08/06/2012
Thanks again
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mrinaliniv
05:38 PM on 08/03/2012
Dear Daphne Wysham, can you please include a small snippet in your article saying why you are qualified to talk about this issue. Absolutely no idea who you are and why I should accept you as a reliable source. Thanks.
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Daphne Wysham
Fellow, IPS
11:38 AM on 08/05/2012
Hi, there. I was born and raised in India and started researching the role of the World Bank in India in 1995. I have worked on energy and climate issues for about 2 decades. I have visited the coal mines and power plants in India. I have spoken to the tribal people who were ousted from their homes. I have attended multiple climate negotiations. I have been invited by members of Congress to help develop principles on climate change. I founded and directed the Sustainable Energy & Economy Network at the Institute for Policy Studies in 1996. We came out with a report in 1997 that got the attention of the Prime Minister of Italy, among many others, alleging that the World Bank was not living up to the mandate given to it in 1992 at the Earth Summit, to help provide clean energy finance for the world's poorest. That report, in turn, catalyzed a movement calling on the World Bank to get out of fossil fuels. That movement, in turn, catalyzed the World Bank to set up the Extractive Industries Review, headed up by Emil Salim. A free download of our most comprehensive report on our research and the World Bank can be found here: http://www.ips-dc.org/reports/wrong_turn_from_rio
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mrinaliniv
12:20 AM on 08/06/2012
Thank you! 
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niumarmion
a temporary being
05:28 PM on 08/03/2012
This sounds like a problem calling for a nuclear power solution with the added benefit of minimal climate change impact.
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Daphne Wysham
Fellow, IPS
11:41 AM on 08/05/2012
Actually, after Fukushima's multiple meltdowns, and due to a terrible track record in dealing with nuclear waste in India, there are regular protests in India against nuclear power. India is ripe for solar and wind power development, however, and small hydro, as well as lots and lots of biogas plants.
Here is Dr. Vandana Shiva on the protests: http://www.youtube.com/watch?v=gxldwz1NT9A
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Timothy Thocher
my doG looked in the mirror and saw God
05:25 PM on 08/03/2012
the world consolidates power, like it does wealth. creating overly complex power grids that require the whole grid to function, creates the likelyhood of this happening more not less. Creating communtiy based power, that functions on its own, with an emerge
01:49 PM on 08/03/2012
Too many people and too few resources are the problem in India.

Every country needs to develop a plan to balance its population with its resources, food, water, energy and jobs. With 600 million poor living in poverty, suffering and despair India has not addressed its over population problem.

Access to family planning services needs to be available to all that want it.

The ever growing population in India make every problem harder to solve.
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deweaver
Scientist, businessman, semi-retired
01:22 PM on 08/03/2012
Good Grief. Talk about trying to shove observations (a power failure) into a narrow preconceived box filled with the World Bank, this takes the cake.
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Daphne Wysham
Fellow, IPS
11:43 AM on 08/05/2012
There is nothing preconceived about my point of view at all. It is entirely grounded in years of experience, documentation, and observation. And it is a point of view shared by hundreds of thousands of people in India.
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deweaver
Scientist, businessman, semi-retired
01:05 PM on 08/05/2012
Remember back when NY and the entire NE part of the USA went down.  Was this also caused by the World Bank? 

Large power outages in large networks are a very complex and technical issue and if you don't understand the basics of system dynamics along with being comfortable with complex math and control systems, you don't understand enough to rationally discuss the subject. 

When you look at these complex networks through a political viewpoint you end up with political thinking people on top of the organization, who also don't understand the engineer talking about "phantom currents", inductive problems, phase angles and control response times with root locus plots and get stupid decisions as a result.  Your trying to shove a pure technical issue into a political context just amplifies the problem. 

Even a system with excess capacity can go down with a little mistake or design error, having nothing to do with politics.  Witness the San Diego problem a few months ago. 
08:31 AM on 08/03/2012
I think developed west should not fear this power cut, in India everybody knows there is only 22 hours of power in a day, there is 2 hours power cut on an average in main land cities, towns & villages. In the Himalayas there is almost no power cut. The problem started because UP a state which is known for its lethargic & corrupt politicians was in the centerstage, this was bound to happen. Other states in India are more responsible, they all had to suffer because of UP. The very next day 21 state chief ministers accused UP state for the losses & the UP state chief minister apologised. Politics in India is very bad, less anybody knows the better. It is the private companies which bring laurels to the country & the Govt. only brings bad name. Unfortunately, unlike the west Electricity is almost fully managed by the Govt. in India.
01:42 AM on 08/03/2012
Climate change planning must be addressed more seriously if we are to have any chance of avoiding the Indain power experience. The role of the lower monsoons should be a daily frontpage item in the HuffPost. Individualized green power solutions targetted at individual businesses, transportation, farms, or homes such as solar panels, hydrinos and fuel cells could potentially avoid these blackouts in the future. America is on the verge of this type of power issue.