China – The Tibet Dilemma

 

Tibet is back in news and this time not for Beijing-Lhasa Train project, but for the pro-autonomy and Anti-Chinese demonstrations. The current wave of violence happens at a time when China can least afford it and is a renewed wave that takes place after a gap of nearly 20 years. In 2008 Beijing will host the Olympics and the current demonstrations don’t augur well with its plan to emerge on the world space as a super power in a otherwise uni-polar world dominated by the US.

The Chinese build up for the Olympics has meant that most of the development and investments have been focused on Beijing and a couple of large cities. This development has been at the cost of Rural China. The situation has reached a point where the Communist Party leaders from the provinces surrounding Beijing have started complaining about the water shortage. A case in point being the province of Hebei which has been suffering from a severe drought but has to make arrangements to supply a additional 300m cubic meters of back-up supplies for the 16 Million residents of Beijing.

 

A network of tunnels, pumps and dams will move water from rivers in the south and west to densely-populated areas in the north Two western routes cross the Tibetan plateau and move water from the upper Yangtze to the Yellow river Central route will divert water from the Danjiangkou reservoir underneath the Yellow river to Beijing and Tianjin Eastern route will pump water from the Yangtze to supply Shandong and Jiangsu provinces The entire project is expected to cost at least $60bn, far exceeding cost of the Three Gorges Dam Estimated completion date is 2010 but Beijing hopes some northern sections will alleviate water shortages in time for the Olympics Critics say the diversions will drain farmland, forcibly relocate tens of thousands of people and impair water quality

A critical issue which continuously bothers the Chinese officials as well as Foreign Policy Experts across the world is whether China will implode due to this unbalanced growth. Will this implosision happen before or after the Olympics and what will be the impact of a unstable China on the US and other Western Economies?

From a geo-political perspective it would be worth conducting a scenario analysis of the shape of things to come. China today is straddled with immense internal pressures due to unbalanced growth and it will require to do some huge change in the policy to make growth more equitable for the common Chinese. Communist states have always been pretty efficient in controlling dissidents, but typically once the peoples hands have been unbound they have gone for the Political Juggler of their masters. It will be a interesting change to monitor if it was to happen pro-actively at the hands of the communist.

China will have to make the transition to a more inclusive growth model. The ramifications of this change could mean:

• a slowdown in China’s growth rate
• a short-term drop in the metal and crude prices in the global market
• Short to medium term impact on the availability of manufactured good from china in reliable manner
• creation of a federal system of governance
• and a long term shift towards a multi-party democracy

All of these and specially democracy and a federal structure will benefit china in the long term. Some real changes will also happen in terms of the current power projection by the PLA and the military-industrial complexes that it controls. The current Tibet crises is only a precursor of challenges that China may face prior the the Olympics and immediately after the event. India due to its immediate proximity will be impacted by any changes in China and needs to closely monitor the situation through all possible means.

Pune’s Power Dilemma

Last couple of days a critical and important piece of news that has been doing the rounds of the newspapers is the future of the Pune Power Model. MERC or the Maharashtra Electricity Regulatory Commission recently passed a judgment stating that the MSEDL or the Power Distributor needs to suspend the Pune Power Model. Ok so how does this make any difference? Well to understand this in greater detail lets first understand the Pune Power Model. The Pune Power Model is a scenario where some 80 odd major power consumers in Pune decided that they would generate their own Power and the difference between the cost of captive power generation and the grid based power cost will be borne by the Power consumers in Pune. In return for bearing this additional cost the consumer will not face any power cuts. This model has been working smoothly for the past 2 years.

However, it needs to be remembered that as a city Pune has been experiencing a growth that far surpasses Mumbai. This inevitably has lead to an additional requirement of Power for Pune City. MSEDL has been meeting this additional power requirement by drawing on the Power Grid. The MERC order is against this specific drawl of power from the Maharashtra Power Grid. The net result is that Pune will start facing a power cut of one and a half hour starting the 1^st April 2008. The obvious question is “SO WHAT?”. One of the reasons for Pune Growth as a Hub for IT/ITeS and Biotech has been the power situation in Pune and MERC’s move is surely going to hurt the competitiveness of one of the Growth Magnets in Maharashtra and India. The losers in the bargain will be the citizens of Pune who have been subjected to this second class treatment for the last 40 years plus. The other BIG LOSER will be MSEDL for which Pune has been a high profitability location for a fairly long time. More over the order of MERC will also lead to a situation where the consumers of Pune will end up paying a higher tariff and still not get quality of supply. The move smacks of conspiracy by private power distribution companies that would like to dislodge a profitable state undertaking from its most profitable market.

Can one analyse the situation dispassionately to identify who is to blame for the current scenario? The answer is obviously yes, and the blame can be and should be shared between the Power Production companies/ Government, MSEDL and the MERC. The power shortage in Maharashtra is now new and additional capacities don’t seem to be coming on steam for at least 2 to 3 year. The Government of Maharashtra has done little or nothing to correct this situation. Part of the blame also is ascribed to the MSEDL for not signing up additional capacities under the Pune Model. But the maximum blame lies with the MERC for its inability to plan and provide the necessary mechanisms to overcome the current crisis. MERC is also to blame for providing an impractical timeline to the MSEDL to make alternate arrangements. MERC need to take cognizance of the fact that Pune will outstrip Mumbai in both size and population in the next 3-4 years. Its tendency to continue treating Pune as a retired person’s paradise shows a clear lack of vision, planning and capability to recognize reality.

The time has come for the people of Pune to dare the MERC to provide a similar treatment to Mumbai. Let Mumbai have a hour and a half long power cut every day with exception to the Western and Central Railways. This scenario is non-acceptable one to the Government and powers to be. It is critical for the Pune Power model to survive and succeed because this experiment has the capability to become a operational model for many cities like Pune. The failure to save this model will lead to a scenario that will benefit only the few powers to be.

The biggest of the beneficiaries will be the Independent Power Producers who will be able to arm twist the government for more favourable terms for their Greenfield power plants and a private power distribution company which has always eyed the Pune market and would like to oust the MSEDL from its most profitable distribution circle. Basis the sheer merits of the situation MSEDL needs to survive and the Pune Power Model has to succeed. There also needs to be a fundamental change in the scenarios that MERC plans for. The MERC has to take cognizance of Pune’s growth and future pre-eminence over Mumbai both from a geographical size, population and size of its economy. Its inability to do so will hurt the investment potential of Maharashtra and lead to urban unrest in cities outside Mumbai. I have mentioned in my past blogs about the Indian Oligarchy. Its critical that the Oligarch don’t succeed for the overall benefit of the society.