India has been gradually succeeding in the provision of basic needs to its citizens—from safe drinking water, to food security, to schooling. Access to electricity for all is now nearing completion, with about 1,25,000 villages and over 50 crore people having gotten access over the last decade. All remaining households in the country are expected to get electricity by 2020. The vital need of clean energy for cooking was not a major priority earlier. India had over 80 crore people using firewood and cow dung cakes for cooking. Smoke from traditional biomass, which is essentially equivalent to secondary smoke from cigarettes, has well-researched and similar adverse health effects. Women, in particular, have been the real sufferers. According to some estimates, there are about 5 lakh avoidable deaths every year as a result in our country. In addition, there is the impact on overall air pollution, which affects the health of all.
This issue has now got focus with the Ujjwala scheme started in 2016 (the Pradhan Mantri Ujjwala Yojana). The below poverty line (BPL) rural households are being given a cooking gas connection and a cylinder for free. The plan is to cover 8 crore households. While it is too early for any meaningful evaluation, there are two related issues that have drawn attention. Unlike urban areas where there usually is home delivery of the gas cylinder to the consumer, in rural areas the consumer is required to go to the dealer to collect the gas cylinder, and this needs at least half a day, which is a real additional cost. The related issue is the one of affordability. The refill rate, according to some sources, is only two to four cylinders in a year, against the estimated needs of nine refills in a year. Further, the creation of a distribution network to cover all the rural households is a gigantic task, with petroleum companies having drawn up investment plans of Rs 30,000 crore to develop the needed infrastructure.
There is, however, an alternative, immediate and cheaper option to that of extending LPG cooking gas supply to cover all the rural households. The electricity network has already been expanded to cover all the villages, and all the remaining households are being electrified with additional central financial assistance under the Saubhagya scheme. These electrified rural households can be encouraged to use electricity for cooking (in many developed countries, cooking with electricity is the norm and the Indians living there do make even rotis on their electric stoves). If this is successfully done, then all households would have switched over to clean cooking energy in a few years’ time, and that would be a truly historic achievement.
An electric induction stove is cheaper than a gas stove. Bulk procurement by EESL (Energy Efficiency Services Limited) should drive down prices significantly, going by the past experience. So, BPL households can be given induction cook stoves free (these cost about one-third the cost of gas cylinders). All other households could be given the stove with the cost being recovered in instalments from electricity bills over, say, a year. The required investment in improving the electricity distribution infrastructure would be lower and can be done faster than for LPG.
The actual cost of using electricity for cooking is similar to that of gas. Whereas the cost of electricity is relatively stable, the cost of LPG goes up with the rise in oil prices as well as with the depreciation of the rupee. About 1,000 units a year should suffice for basic cooking and lighting needs of a household. The additional demand for electricity for cooking would be about 150 to 200 billion units per year.
There is, fortunately, spare power-generating capacity in the country as of now, as demand growth has been far lower than anticipated in the last few years. The plant load factor of thermal power stations has come down to around 60%, whereas it could comfortably go up to around 80%. In addition, there are over 50,000 MW of new thermal power plants under development. With increased capacity utilisation from the existing plants and generation from the new plants in the pipeline, the additional demand for cooking could be met without much difficulty.
A major collateral benefit of this surge in demand for electricity would be the substantial mitigation of the problem of stressed assets and NPAs of the power sector. Demand growth has been quite low and large capacities have been created, and these are underutilised. In addition, over 50,000 MW are also in the pipeline. About `2 lakh crore of bank loans are at risk. With the sudden creation of additional demand of 150 to 200 billion units a year, the problem should become manageable. This would bring great relief both to the banks and to the government.
Assuming the demand for cooking by all households can be met, the question of the willingness and the capacity to pay for the use of electricity for cooking by poorer households is critical. Clearly, there is a case for lifeline consumption at subsidised rates to include basic cooking. A rate of `3 per unit for the consumption up to 100 units per month would be reasonable enough even for poor households. They would gladly pay `300 per month for cooking and lighting.
The difference between the actual cost of supply of over Rs 6 and the Rs 3 per unit rate of recovery would, however, need to be met. The state governments could choose between a mix of cross-subsidy and direct subsidy. This is both manageable as well as affordable. From a gender perspective, this deserves the highest priority due to the transformation in the health and the quality of life of rural women that would be brought about as a result of this step.
As the share of renewable resources in electricity generation goes up, so would its share in cooking, whereas with the use of gas the carbon intensity from cooking would remain at a plateau. For the objective of moving to a less carbon-intensive economy, this would be a vital transition.
By Ajay Shankar
Distinguished Fellow, TERI (The Energy and Resources Institute)