Haryana’s power crisis

The genuine consumers are the helpless spectators and are being fleeced.

Surinder

kumar
Are the newly-established discoms heading towards insolvency?
Haryana has been groaning under an unpredictable power supply, and there could be a crisis ahead. The state’s electricity regulatory commission has acknowledged that the level of consumer satisfaction was such that ‘consumers have to make strenuous efforts to get even their minor grievances redressed’. The power tariff increase by itself will not resolve the impending crisis. It is becoming clear that Haryana’s power sector reforms have been derailed; the newly established distribution companies (discoms) are heading towards insolvency and neither the political leadership nor the management of the companies appear to have any stake in resorting it to health. The genuine consumers are the helpless spectators and are being fleeced.

The state’s power distribution companies in their annual 2012-13 reports have projected their combined revenue deficit at Rs 7755.23 crore, whereas the Haryana State Electricity Regulatory Commission (HERC) maintains that their revenue deficit will be only Rs 1666.81 crore. The HERC has allowed an increase in tariff rates which will get an additional revenue of Rs 1857.07 crores, contributing Rs 190.26 crores towards past accumulated revenue deficit.

The generation, transmission, and distribution companies are being managed by the Haryana government through the serving bureaucrats who have little stake in the performance of the companies being managed. They enjoy ‘fruits’ of the plump posts by obliging the political bosses with no personal accountability. All these companies should be managed by professional managers whose further career and incentives are linked to the company’s performance. In a democracy where one branch of the Central government called regulator is expected to regulate the other branch of the Centre, the challenge can be met provided various stakeholders, public interest groups and non-governmental organisations (NGOs) are called upon to participate in public hearings for which the regulatory commission is expected to play a critical role even as per the Electricity Act 2003.

The experience of restructuring of electricity supply system the world over suggests that it is an industry which is inherently monopolistic and requires highest order of coordination, supervision and synchronisation. The autonomy of the regulator and the compliance of its directions must be ensured for which people have to act as watchdogs. Otherwise, there would be a chaos. A basic parameter for fixing the power tariff is the cost of supplying electricity to various categories of consumers. To date, nobody has precise estimates of the cost of electricity supply at various voltages! The existing exercise on aggregate revenue requirement (ARR) by the distribution companies and the HERC is based on ‘norms’. However, the distribution companies have a vested interest in inflating the consumption or demand and various components of costs. The HERC reduces these figures to make it appear ‘respectable’. About 50 per cent of the total supply to the agricultural pump-sets has been unmetered even till now and about two lakh meters were reported to be defective and not working. Thus, the supply was estimated on an average consumption basis, which is at best an intelligent guess. The distribution system has been pathetic. It has been reported that Uttar Haryana Bijli Vitran Nigam Limited (UHBVNL) has 3340 11 kilovolts (KV) ‘feeders’. During April-December 2011, 658 feeders reported electricity distribution losses between 25 per cent and 50 per cent; 173 feeders had distribution losses between 50 per cent and 75 per cent; 14 feeders reported over 75 per cent losses.

In the case of Dakshin Haryana Bijli Vitran Niigam (DHBVNL) , of a total of 2958 11KV feeders, 680 feeders reported distribution losses between 25 per cent to 50 per cent; 680 feeders had losses between 50 per cent and 75 per cent. Most of these were rural feeders. There were 289 urban feeders where distribution losses were more than 25 per cent. Active connivance between the political leadership, management and the ‘consumers’ is apparent. As on September, 2011, there were 1.80 lakh defective meters awaiting replacement and 12 lakh electro-mechanical meters waiting to be replaced by electronic meters. As per section 55(1) of the Electricity Act 2003, ’ No licensee shall supply electricity, after expiry of two years from the appointed date, except through installation of correct meter in accordance with the regulation to be made in this behalf by the authority’.

As per the directions of the HERC all the electro-mechanical meters should have been replaced in Haryana by March 2008. This failure has been the major cause of pilferage of power and under assessment of energy, adding to the electricity and revenue losses.

The HERC has estimated the total agricultural subsidy to be Rs 3974 crores, whereas the state government has made a provision of Rs 3873 crore in its budget for 2012-13, leaving an uncovered deficit of Rs 101 crore. However, it is surprising and disturbing that while HERC has provided for all the unmet revenue gap, the backlog of accumulated financial loss of UHBVNL as on March 31,2011 had increased to Rs 3,819 crore; and of DHBVNL to Rs 2,686 crore. Obviously, distribution companies may be depending on heavy borrowings to meet their expenses.

The unpaid electricity bills due to UHBVNL as on March 31, 2011 were to the tune of Rs 2043 crore, of which Rs 1488 crore were due from rural domestic consumers. Pending dues of DHBVNL amounted to Rs 1914 crores. To add to the confusion, the state government as of March 31,2011 had not paid its contribution to rural electrification subsidy amounting to Rs 1048.83 crore to UHBVNL, and Rs 593.6 crore to DHBVNL. The HERC has stated that on the basis of recent data submitted by the distribution companies, the distribution losses for 2010-11 worked out to 33 per cent and 24 per cent for the UHBVNL and DHBVNL respectively. The figures are high considering the huge investment in strengthening distribution system.