power
Groundbreaking work, no plants yet
The SAD-BJP government may miss by a couple of years the deadline it set for delivering ‘surplus power’, but the new plants launched are a major initiative in years. Meanwhile, it met the demand through market purchases at a huge cost
Jangveer Singh
Tribune News Service

The Shiromani Akali Dal promise was simple. It would make power availability in the state surplus to the requirement. The SAD-BJP government is now close to the end of its tenure, and the promise is nowhere near being delivered.

But there is a positive too. The government may have failed to keep the 2007 manifesto promise, but it has made vigorous efforts in the backdrop of a recession period to start work on three coal-based thermal plants with a combined generation capacity of 3,920 mega watt (MW) in the private sector.

With the launch of these plants at Rajpura (1,400 MW), Talwandi Sabo (1,980 MW) and Goindwal (540 MW), the government hopes the power position would ease sometime in 2013-14, except for “peaking” shortages during paddy season. The first unit (660 MW) at Talwandi Sabo is expected to be commissioned in December 2012, and its remaining two in another six to eight months. At Rajpura, the first unit of 700 MW is slated to come up in January 2014, and at Goindwal Sahib the first 270 MW unit is expected by January 2013.

Another important initiative the government undertook was the restructuring of the erstwhile Punjab State Electricity Board (PSEB) into two separate generation (Punjab State Power Corporation Limited, or PSPCL) and distribution companies (Punjab State Transmission Corporation Limited, PSTCL), even if the action was not accompanied by the desperately needed financial restructuring.

Deputy Chief Minister Sukhbir Singh Badal showed the political will required to split the PSEB in the face of major employee and Leftist farmer resistance. Post restructuring, the transmission and distribution system was strengthened, improving efficiency in operations. The power supply position also improved, even though the government could not fulfil its manifesto commitment to ensure 24-hour uninterrupted supply to industry in the state.

Despite taking the plunge to restructure the PSEB, the government did not follow through with the creation of autonomous companies so they may be run on corporate lines, as per the intention of the Electricity Act, 2003, which forced the government to unbundle the board in the first place.

PSPCL and PSTCL have been made government departments, and have even lost the limited autonomy enjoyed by the PSEB as a board constituted under a Central act. While the functioning of the corporations has suffered after restructuring, all populist schemes like release of tube-wells to favourites have continued.

The companies were also neither given a clean balance sheet nor was fresh equity infused into them. All past losses were taken over by PSPCL, affecting its borrowing limits in the open market. The company, which has accrued commercial losses of Rs 11,000 crore at present, is on the verge of financial collapse.

There was no attempt at reformation. Despite a mammoth internal struggle and prodding by its alliance partner the BJP, the SAD refused to dilute the free power facility given to the 11.5 lakh agricultural tube-well connection holders in the state. The government is straddled with the responsibility of paying a subsidy of Rs 4,188 crore per annum to PSPCL, which it has paid erratically. It has also made paper adjustment — cancelling subsidy payment against loans extended to the corporation — of Rs 4,000 crore in the past five years.

Freebies continue and are, in fact, being increased. With an eye on the polls, the government has widened the power subsidy for domestic consumers of certain categories, also taking in economically weaker sections and landless labourers. This has brought around 35 per cent of the state's population under this subsidy, taking the number of beneficiaries from the earlier 9 lakh (SC and economically weaker sections) to 14 lakh (5 lakh landless labourers added). While SC and the economically weak get 200 units per month (400 in a bimonthly billing cycle), landless labourers get 100 units of free power per month. This has added to the subsidy burden Rs 500 crore per annum.

Surplus, but at what cost?

The government projects the state would be power surplus by 2013-14. But the cost of generating that power and power tariffs would be major issues. This is because the government has chosen to follow the MOU route with the three companies, rather than go for competitive bidding, as recommended by the Central Electricity Regulatory Commission (CERC).

PSPCL may end up paying more for power, as the power purchase agreements with the three private players make it clear the state would have to purchase the entire power produced by them. This means, in case of fall in demand, PSPCL would have to pay the private companies fixed charges without buying any power.

State sector expansion ignored

There are issues about all new projects coming up in the private sector too. PSEB Engineers Association president H.S. Bedi claims the government has ignored the state sector. He claims this will have an adverse impact on the power sector in the long run, adding that the state sector is needed to give competition to private players. Bedi said the government had given in-principle approval to the establishment of a 1,320 MW thermal plant in the state sector in October this year, and that this needed to be expedited. There are three state-run thermal plants at Ropar (1,260 MW), Lehra Mohabbat (920 MW) and Bathinda (440 MW), generating 2,620 MW.

Efficiency from restructuring

Post restructuring of the PSEB, the government put PSPCL in the charge of the senior-most power engineer in the state, K.D. Chaudhari, who had a track record of bringing in efficiency in the system.

Even as he was not given a free hand, Chaudhari has shown results. Talking to The Tribune, he said during the past year and a half, efficiency had been brought into the system by replacing 5,000 km of transmission lines. Similarly, 30,000-overloaded distribution transformers had been "deloaded", reducing transmission losses from 20 to 18 per cent, and 10 lakh power meters had been shifted outside the premises of consumers to check power theft.

Chaudhari said PSPCL had also achieved the distinction of purchasing more power in 2011 at a lesser cost by planning ahead and doubling its power banking arrangements with other states. He claimed there were no scheduled power cuts since April 2011, and that the disruptions had occurred due to storms or breakdowns. For the first time in the state, both urban and rural consumers were now getting the same supply, and IT services had been introduced for public convenience.

Cold comfort of thermal power

Upon taking over the reins of the state, the SAD-BJP government conceived establishing six new thermal plants in the state to generate 10,640 MW of power. Three plants at Rajpura, Goindwal Sahib and Talwandi Sabo are well on the way now after delays due to recession, and rebidding in the case of the Rajpura plant. The three other plants, however, have still to take off.

A 1,320 MW thermal plant proposed in Mansa by India Bulls has run into problems, with farmers starting an agitation to prevent acquisition of land at Gobindpura village. The government is also yet to start acquisition of land for the 1,320 MW plant planned at Kot Shamir in Bathinda district. The 2,640 MW Gidderbaha plant is also facing land acquisition problems.

Huge amounts of land are required — the Gidderbaha plant needs 2,000 acres — and land is at a premium in Punjab. Another challenge for plants fired by coal in Punjab is that the coal supply chain is very long, and thus expensive. Experts say at least 50 train loads of coal per day would be required to feed the six new thermal plants when they run to full capacity. At present, a dozen rakes feed the three state-run plants that have a total capacity of 2,620 MW.

Sources say Coal India has committed only 50 per cent of the requirement for the new plants, and that these plants would have to depend on imported coal, which would increase the cost of power. Any break in this supply line could prove to be very expensive for the plant managements. Experts had recommended establishment of thermal plants near the coal pitheads in Bihar and Jharkhand. But the government did not pay heed to this advice. It has also brushed aside concerns of environmentalists, who advised against concentrating a number of thermal plants in Bathinda and Mansa districts, as pollution could become a major issue in the area once the plants started running.