Bello on global energy "de-regulation"

[Ian Murray]

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The Paradigm Crisis behind the Power Crisis
By Walden Bello
(This article is based on the author's talk at the Teach-in on "Technology
and Globalization" sponsored by the International Forum on Globalization on
Feb. 24-25, 2001, in New York City.)
In many developing nations today, state-owned centralized power systems are
mired in mismanagement, corruption, and debt. And in country after country,
influential multilateral agencies such as the Asian Development Bank and
the World Bank, have come up with a cure-all: privatization and
deregulation. This is the case in India, Thailand, and the Philippines.
Yet the state ownership versus privatization debate obscures the
complexities of the crisis of power generation and delivery in the Third
World. For what is behind the troubles of giant agencies such as the
Electricity Generating Authority of Thailand (Egat) and the National Power
Corporation (Napocor) in the Philippines is not the "natural"inefficiency
of state-managed enterprises but the crisis of the paradigm that underpins
them: centralized electrification.
Centralized technologies are inextricably linked with the politics of
domination of our countries by central elites-- by technocrats, urban
elites, and local and foreign big business. Behind the crisis of these
technologies is the unraveling of a longtime developmentalist alliance
among technocrats, multilateral agencies, and private corporations
dedicated to foisting devastating technologies on developing nations in the
name of a vision of modernity and the search for profitability. The power
industry, in particular, illustrates this destructive symbiosis of
modernity and profitability.
One of the earliest expressions of the sense that generation and
distribution of power was a central test of modernity was made by Lenin in
1921, when he defined socialism as "Soviet Power plus Electricity." But it
was not only Soviet Marxists who equated electric power with the desirable
society. Jawaharlal Nehru, the dominant figure in post-World War II India,
called dams the "temples of modern India," a statement that, as Indian
author Arundhati Roy points out, has made its way into primary school
textbooks in every Indian language. Big dams have become an article of
faith inextricably linked with nationalism. To question their utility
amounts almost to sedition."
Centralized Electrification
The technological blueprint for power development for the post-World War II
period was that of creating a limited number of power generators--giant
dams, coal or oil-powered plants, or nuclear plants--at strategic points
which would generate electricity that would be distributed to every nook
and cranny of the country. Traditional or local sources of power that
allowed some degree of self-sufficiency were considered backward. If you
were not hooked up to a central grid, you were backward. Centralized
electrification with its big dams, big plants, big nukes became the rage.
Indeed, there was an almost religious fervor about this vision among
technocrats who defined their life's work as "missionary electrification"
or the connection of the most distant village to the central grid.
It was, it must be noted, a grand mission that was supported in India,
Thailand, South Vietnam and the Philippines by millions of dollars worth of
grants from the US Agency for International Development. Not surprisingly,
this generosity was not unconnected to the less than salutary mission of
pacifying rural areas permeable to communist agitation.
In any event, in the name of missionary electrification, India's
technocrats, Roy observes in her brilliant essay, "The Cost of Living," not
only built "new dams and irrigation schemes...[but also] took control of
small, traditional water-harvesting systems that had been managed for
thousands of years and allowed them to atrophy." Here Roy expresses an
essential truth: that centralized electrification preempted the development
of alternative power systems that could have been more decentralized, more
people-oriented, more environmentally benign, and less capital intensive.
Centralized electrification, like every ideology, served certain interests,
and these were definitely not those of the ordinary masses. The key
interest groups were:
- key bilateral and multilateral development agencies. In Asia, the World
Bank and the Asian Development Bank (ADB) became the biggest funders of
centralized power technologies for export to Third World countries while,
as noted earlier, USAID supported rural electrification. Centralized power
development provided a grand rationale for the existence and expansion of
these institutions into giant bureaucracies.
- big multinational contractors like Bechtel or Enron, which made
tremendous profits building dams or providing power consulting services.
- exporters of power plants, including nuclear plants, like General
Electric and Westinghouse, whose costs were subsidized by government export
agencies, like the US Eximbank, with the taxes of citizens in the developed
countries.
- powerful local coalitions of power technocrats, big business, and
urban-industrial elites. Despite the rhetoric about "rural
electrification," centralized electrification was essentially biased toward
the city and industry. Essentially, especially in the case of dams, it
involved expending the natural capital of the countryside and the forests
to subsidize the growth urban-based industry. Industry was the future.
Industry was what really added value. Industry was synonymous with national
power. Agriculture was the past.
Aside from being an element in counterinsurgency programs, rural
electrification was simply a small concession to the countryside to pacify
opposition to city-oriented centralized electrification. Large
"multipurpose" dams that allegedly provided countries simultaneously with
the benefits of power and irrigation were concerned first and foremost with
power for the urban sector.
Costs...
While these interests benefited, others paid the costs. Specifically, it
was the rural areas and the environment that absorbed the costs of
centralized electrification. Tremendous crimes have been committed in the
name of power generation and irrigation, says Roy, but these were hidden
because governments never recorded these costs.
- In Thailand, for instance, the government has no records on how many
communities and rural peoples have been displaced by the score of massive
hydroelectric and irrigation dams built since the 1950's. Very few have
been paid compensation. Communities relocated, vanished, or were simply
absorbed into urban slums.
- In India, Roy calculates that large dams have displaced about 33 million
people in the last 50 years, about 60 per cent of them being either
untouchables or indigenous peoples. Like Thailand, India, in fact, does not
have a national resettlement policy for those displaced by dams. Neither
does the Philippines.
- The costs to the environment have been tremendous: in Thailand, hundreds
of thousands of hectares of primal forest land were submerged, rivers
changed their courses, fishing as a livelihood atrophied among riverine
communities, and many species of fish simply vanished. In India, Roy points
out, "the evidence against Big Dams is mounting alarmingly--irrigation
disasters, dam-induced floods, the fact that there are more drought prone
and flood prone areas today than there were in 1947. The fact that not a
single river in the plains has potable water."
Meager Harvest
Yet what benefits have 50 years or so of centralized electrification really
brought?
- After imposing such high human and ecological costs, the amount of power
generated by the controversial Pak Mun Dam in northeastern Thailand can
barely supply the daily electricity needs of a handful of shopping malls in
Bangkok.
- In India, 22 per cent of power generated is lost in transmission and
system inefficiencies. The proportion for the Philippines is at least 25
per cent, which is probably the standard for developing countries. - In the
Philippines, after 50 years of massive electrification, over 30 per cent of
rural households have no access to electricity. In India, some 70 per cent
have no access to electricity.
Beneficiaries
Yet, this is not surprising, since centralized electrification was never
really meant principally to deliver affordable power to people in an
effective way. What it really meant to deliver were different:
- First of all, centralized electrification was geared to deliver a vision
of modernity to satisfy the ambitions of technocrats and authoritarian
elites like Marcos of the Philippines, who identified his power with the
power that was to be delivered by the Bataan Nuclear Power Plant.
- It sought to deliver taxpayers-subsidized profits for multinational and
local dam contractors and the builders of power plants like the ubiquitous
Bechtel.
- Centralized electrification sought provides a rationale for the
maintenance and expansion of giant multilateral bureaucracies like the
Asian Development Bank and the World Bank.
- Centralized electrification did not aim to provide a program of coherent,
balanced development but to trigger a process of destabilizing, lopsided,
urban-oriented hyperdevelopment which would leave most of the countryside
behind as national resources were focused on building a manufacturing and
industrial sector in the manner of the West.
The New Panacea
Today, these systems of centralized electrification run by governments have
become terribly expensive to maintain. Now the IMF, World Bank, and Asian
Development Bank want governments to privatize and deregulate these
systems. While governments had to keep electricity prices controlled to
justify the existence of expensive generation, transmission, and
distribution facilities, the private sector will be expected to raise
prices and streamline services--meaning, it will simply eliminate from the
rolls of consumers those who cannot pay. After having been taken for a ride
by the ideology of centralized electrification, people will now be taken on
another, equally dangerous spin by the ideology of privatization--by
propaganda about the greater efficiency of the private delivery of
essential services.
Footing the Bill
Not surprisingly, it is the consumers--rural and urban--who will foot the
costs of the transition, for the private sector corporations--many of them
transnational firms like Enron or KEPCO--will not be pushed to absorb the
full costs of these capital-intensive systems purchased with massive loans
by governments. In the Philippines, consumers will subsidize the sale of
the National Power Corporation to the private sector by paying a tax
designed to collect $10 billion in stranded costs.
In country after country today, the physical assets of centralized systems
are being divided up among private firms. But this is not among many small
and medium firms, which would at least be consistent with philosophy of
free enterprise. No, the model for us in the Third World is the system of
power deregulation that California initiated in the early 1990's. For we
are now told by technocrats and big business that the "economies of scale"
dictate that the power facilities should go to a few, so-called efficient
generators of energy. Thus, the dream of big centralized power that so many
of our technocrats associated with national power has turned out to be a
bad dream. It has turned out to be simply a phase in the delivery of
electric power to the hands of private monopolies, many of them foreign
transnationals. And with the botched California deregulation as a model, it
need hardly be stated that we are likely to be headed for a much bigger
economic disaster than the crisis of state-run centralized power systems.
People are, however, underestimated. For throughout the Third World at this
point, in places like Narmada in India, in Pak Mun in Thailand, people are
actively engaged in struggles against the implementation of centralized
technologies bent on delivering the illusion but not the reality of
national progress. These struggles in the distant countryside are beginning
to wake up the supposed urban beneficiaries of centralized electrification
to the reality that this obsolete and flawed paradigm of national advance
is actually turning out to be phase in the delivery of horribly expensive
national assets at their expense to the hands of private monopolies, like
the power distributor Meralco in the Philippines, a corporation that is the
quintessential representative of the incestuous union of electricity,
monopoly, and super-profitability.
People, in short, are increasingly aware that the struggle for community,
for independence, for the future is now inextricably linked to the struggle
against bad centralized technologies that simply promote domination,
dependence, and dissolution.
Walden Bello is the executive Director of Focus on the Global South and can
be contacted at waldenbello at hotmail.com