VZCZCXRO5138
RR RUEHBI RUEHCI RUEHNEH
DE RUEHCI #0322/01 3361159
ZNR UUUUU ZZH
R 021159Z DEC 09
FM AMCONSUL KOLKATA
TO RUEHC/SECSTATE WASHDC 2505
INFO RUEHNE/AMEMBASSY NEW DELHI 2404
RUEHBI/AMCONSUL MUMBAI 1017
RUEHCG/AMCONSUL CHENNAI 1014
RUEHNEH/AMCONSUL HYDERABAD 0080
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEHCI/AMCONSUL KOLKATA 3130

UNCLAS SECTION 01 OF 03 KOLKATA 000322 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/INSB, EEB/ESC/IEC/ENR (SHAH/MONOSSON), S/SECC, OES 
DEPT OF ENERGY (SANDALOW/OCONNOR/GINSBERG/CUTLER) 
 
E.O. 12958: N/A 
TAGS: ENRG SENV EAGR EINV KGHG IN
SUBJECT: MAJORITY OF INDIA'S NON-ELECTRIFIED VILLAGES IN EASTERN 
REGION: PUBLIC/PRIVATE, CONVENTIONAL/RENEWABLE FIRMS TO PROVIDE 
SOLUTIONS 
 
REF: A. KOLKATA 171 
     ¶B. KOLKATA 291 
 
¶1. (U) More than a quarter of India's villages remain without 
electricity and sixty percent of these are in the five eastern 
states of Assam, Orissa, Bihar, Jharkhand and West Bengal.  In 
2005 the GoI launched an improved rural electrification program, 
but progress continues to be hampered by security concerns, land 
acquisition difficulties, transmission and distribution 
shortcomings and state/federal coordination.  In the east, West 
Bengal's rural electrification progress stands out due to strong 
leadership from state officials and implementing partners. 
Public and private players are already using renewable energy 
sources for remote village electrification in West Bengal and 
Bihar, with other states in the planning stages.  Optimists 
predict 2012, at the earliest, before the GoI realizes its goal 
of providing 100 percent of households in every village with 
access to electricity. 
 
 
 
Majority of India's Non-electrified Villages are in the East; 
Great Disparity within the Region 
 
 
 
¶2. (U) According to the GoI Ministry of Power's September 2009 
report on village electrification, more than a quarter of 
India's villages remain without electricity and sixty percent of 
these are in the five eastern states of Assam, Orissa, Bihar, 
Jharkhand and West Bengal.  However, within the east, there is 
great disparity: 99.5 percent of West Bengal's villages are 
electrified, 78.6 percent of Assam's, 62.6 percent of Orissa's, 
61.3 percent of Bihar's and 31 percent of Jharkhand's.  These 
figures dramatically understate actual electrification as the 
GoI defines a village as "electrified" if 10 percent of the 
total number of households in a village has electricity 
connections. 
 
 
 
2005 National Rural Electrification Program: More Central 
Government Support than Previous Programs 
 
 
 
¶3. (U) In 2005 the GoI launched a new and improved rural 
electrification program, the Rajiv Gandhi Grameen Vidyutikarn 
Yojana (RGGVY), with a larger central government role in 
financial assistance and coordination than past programs.  Its 
goal is to ensure that every household in every village has 
access to electricity by 2012 (the original date was 2009). 
Past initiatives floundered due primarily to low levels of 
central funding, but also because of weak customer bases and 
high maintenance costs for rural infrastructure.  Under the new 
program, the federal government funds 90 percent of the costs 
for rural electricity infrastructure (previously it had been as 
low as 40 percent) and the states fund the remainder, either 
through loans from financial institutions or internal budgetary 
resources.  Households living below the poverty line are also 
provided with free connections (but not free electricity). 
 
 
 
Disparate Progress in the East under RGGVY: West Bengal Leads, 
Orissa Lags 
 
 
 
¶4. (U) Eastern Indian states have made varying amounts of 
progress under the RGGVY.  From the program's launch in 2005 up 
until November 2009, of the five largest eastern states, West 
Bengal has performed the best; it electrified 86 percent of its 
previously non-electrified villages.  On the other hand, Orissa 
has managed to electrify a paltry 14 percent of its previously 
non-electrified villages.  S. Ghosh Dastidar, the regional 
manager of RGGVY's implementing agency, the Rural 
Electrification Corporation (REC), acknowledged both general and 
state-specific reasons for the delay.  He highlighted the 
difficulty of identifying vendors for work in remote, rural 
areas and compiling lists of families eligible for free 
household electricity connections. 
 
 
 
KOLKATA 00000322  002 OF 003 
 
 
 
¶5. (SBU) On the other hand, strong state political and 
administrative leadership make a difference.  He spoke highly of 
the Chairman of the West Bengal State Electricity Distribution 
Company who oversees the rural electrification program in the 
state.  He singled out his daily monitoring of progress, monthly 
interagency coordination and focus on ensuring paid connections 
are provided to those households above the poverty line to 
generate revenue.  In West Bengal, media suggests that the 
recent rural electrification push may also be driven by the 
ailing Left Front government's attempt to counter the inroads 
the opposition Trinamool and Congress have made with rural 
populations.   According to the West Bengal senior civil servant 
for energy, Dr. G .D. Gautama, 100 percent of West Bengal 
village's will be "electrified" by the end of 2009 and all rural 
households will have access to electricity by 2010. 
 
 
 
The Challenges of Setting up Rural Electricity Infrastructure 
 
 
 
¶6. (SBU) Rural electrification in the east continues to be 
hampered by security concerns, land acquisition difficulties, 
transmission and distribution shortcomings and state/federal 
coordination.  An REC official told EconFSN that "no electricity 
pole can be pitched" in rural areas in Jharkhand without paying 
off the Maoists/Naxals.  He also highlighted the poor quality of 
Bihar's transmission and distribution network, which discourages 
customer payment for poor and unreliable electricity service. 
Bihar's senior civil servant for energy, Ravi Kant told PolOFF 
that difficulty in acquiring land for substations and 
transmission lines has delayed RGGVY implementation.  Their 
program also suffers from coordination issues between the 
project implementer, which is one of the national power 
generation companies, its state-level electricity distribution 
partner and the state-level utility companies that eventually 
operate the system. 
 
 
 
Decentralized Distributed Generation through Conventional and 
Renewable Sources 
 
 
 
¶7. (U) In areas where provision of grid electricity is neither 
feasible nor cost-effective, the RGGVY program provides a 90 
percent capital subsidy for establishing decentralized 
distributed generation facilities using conventional or 
renewable sources.  The central Ministry of New and Renewable 
Energy further supports renewable energy sources through its 
Remote Village Electrification (RVE) program. 
 
 
 
¶8. (SBU) In India, the West Bengal Renewable Energy Development 
Agency (WBREDA) is one of the leaders in the deployment of 
off-grid solar and biomass projects, particularly in areas such 
as the Sunderbans islands, where grid connections are not 
feasible.  WBREDA has also successfully piloted a USAID 
supported micro-turbine project and has plans for a tidal energy 
project.  The Orissa government has identified 1,786 villages 
where conventional source power is not feasible.  In the first 
phase of a multi-phase renewable program, it will electrify 203 
villages using solar and biomass resources.  The Assam 
government has identified 2,000 remote villages for solar 
photovoltaic power generation and 90 potential mini-hydropower 
sites (total capacity of 148.5 MW).  The Bihar government has 
focused on biomass as an alternative energy source, particularly 
gasification or combustion of rice husk, and estimates a state 
potential of 200 MW of power. 
 
 
 
Progress of Government Projects Slow, Private Sector Steps in To 
Fill the Gap 
 
 
 
¶9. (U) While a number of the eastern state renewable energy 
agencies have plans to set up renewable distributed generation 
 
KOLKATA 00000322  003 OF 003 
 
 
projects, only West Bengal's agency has made any progress worth 
mention.  In states like West Bengal and Bihar, private players 
have stepped in to fill the gap, with or without state 
incentives.  West Bengal's favorable incentives and feed in 
tariff policy have attracted investments in solar projects both 
in manufacturing of equipment and generation (Reftel A).  In 
Bihar, the U.S.-firm Husk Power Services is setting up rice husk 
based gasifier systems with little government support to produce 
electricity in remote villages where grid connections are 
distant dreams (Reftel B).  The state governments of Orissa, 
Jharkhand and Assam have yet to announce favorable tariff or 
other incentives to attract significant private participation in 
the renewable sector. 
 
 
 
Comment 
 
 
 
¶10. (U) The GoI's current rural electrification program is an 
improvement over previous incarnations, but the challenges 
remain daunting.  The ambitious goal of providing electricity 
access to every household in every village has already slipped 
once, from 2009 to 2012, and most likely will slip again.  Rural 
electrification is a critical component in the GoI's strategy to 
develop and unlock the economic potential of its rural areas. 
The Congress-led United Progressive Alliance's re-election 
earlier this year and focus on the "common man" are encouraging 
signs that the program's central support will continue. 
However, strong state government support clearly makes a 
difference in determining the program's successful 
implementation. 
PAYNE