Will Pawar halt power sector losses?
Anjaya AnparthiAnjaya Anparthi, TNN | Sep 9, 2011
NAGPUR: Better late than never. Deputy chief minister and energy minister Ajit Pawar is finally taking note of various problems affecting thermal power generation and causing losses. His tour of Vidarbha over Sept 9 and 10 is aimed at over halt acute generation losses being suffered for various reasons.

The power tariff is directly linked with Mahagenco's power generation as MSEDCL purchases a bulk of power from it. Earlier, MSEDCL was totally dependent on Mahagenco power. As the state saw steep rise in demand and Mahagenco failed to keep pace, MSEDCL had to start purchasing costly power from central sector and private companies. It led to increase in tariff every year as Mahagenco power is much cheaper. If Mahagenco had been generating as per requirement, the tariff would have been far less than what it is.

Even though Mahagenco's share has come down to half of total power purchase, still the utility may play crucial role in determination of tariff as its installed generation capacity is very high. In 2010-11, MSEDCL purchased 87,762 million units (MU) at the cost of Rs 25,289 crore (at Rs 2.88/unit and after adding transmission losses of 4.85% it will be Rs 3.02/unit). Of this, Mahagenco's contribution was 42,239 MU at the cost of Rs 11,620 crore (at Rs 2.75 per unit including fixed and variable charges).

After scrapping 10 old units, Mahagenco's installed capacity is 9,676 MW including 6,480 MW thermal, 2,344 MW hydel, and 840 MW gas. But Mahagenco could generate only 70% of capacity from its seven thermal power stations. CAG's latest report says Mahagenco incurred a revenue loss of around Rs 400 crore between 2005-06 and 2009-10 due to low generation.

If Mahagenco pushed its generation to around 80-85%, the tariff may be controlled or even brought down to some extent. During monsoon and winter, the power demand comes down to 9,000-10,000 MW. MSEDCL may meet this entirely from Mahagenco and central sector that also supplies at cheaper rate.

Mahagenco blames sub-standard coal for low PLF. The inferior quality coal is causing heavy loss due to price difference between grades, lower power generation, damage to plant and machinery, and excess consumption of coal and oil. Even CAG observed that Mahagenco incurred a loss of Rs 5,515 crore just due to excess consumption of coal between 2005-06 and 2009-10.

The lower Mahagenco generation is adding to the loss. As MSEDCL purchases power from private players to meet the demand in summer, Mahagenco is asked to reduce its generation when demand is less. As it is causing huge loss, Mahagenco has submitted a petition with MERC on July 18, 2011 seeking consideration on the expected variation in the performance parameter for its units on account of backing down instructions from SLDC.

Apart from these, Mahagenco is allegedly incurring a loss of around Rs 600 crore per year from wash coal contract for last six years. Will Pawar manage address all these issues?