Politics over electricity damaging consumer interest….by Er. Bhupinder Singh (Retd)
November 23, 2021: Electricity shortages this summer in Punjab forced activities to come to stand still at homes, in commercial and industrial establishments. It is the responsibility of the distribution license i.e. PSPCL to make arrangements for providing round-the-clock electricity to the consumers as per Sections 42(1) and 43(1) of the Electricity Act, 2003.
Does the white paper tabled by the government in Punjab Vidhan Sabha serve the twin purpose of providing cheaper and uninterrupted power to the consumers? Realistic planning and not politics in matters related to electricity shall achieve these objectives.
Narrative around costly power:
A sustained narrative has been created in the public domain that power is costly in Punjab, and that, the prime reason for the high cost is due to costly power purchases from the three private sector thermal plants located within the state.
However, the data for FY 2019-20 released by the Power Finance Corporation of Govt. of India reveals otherwise.
The per-unit cost of power including own generation for Punjab is Rs. 4.33 compared to 4.79( Haryana ), 4.81 ( Rajasthan ), 5.19 ( U.P ), and 5.56 for Delhi.
PSPCL has stated the same in its petition to PSERC for the current year's tariff order. Also, PSPCL has further stated that the average cost of supply (ACOS ) to the consumers in Punjab is the lowest amongst its neighbors. ACOS for Punjab is Rs. 6.66 per unit compared to 6.89 ( Haryana ), 8.04 ( Rajasthan ), 7.35 ( U.P ), and 6.98 for Delhi.
Fixed charges for surrendered power:
It has also been argued that only the private thermal plants are being paid fixed charges for surrendered power ( power not purchased ) and this is making power costly.
However, on the contrary, PSPCL paid a total of Rs. 1366 crore for FY 2020-21 as fixed charges for surrendered power, which included Rs. 841 crore. to the three private sector thermal plants within the state, Rs. 400 crore to the central sector plants and Rs. 124 crore for other plants.
Importantly, PSPCL has also incurred a similar expenditure of approx. 500 cr. on its thermal plants.The narrative built up around costly power, therefore, belies these facts, and the real reasons for costly power lie elsewhere.
What the white paper says:
The white paper essentially says that the peak demand projections were hugely inflated and this resulted in the addition of a generation capacity of around 4000MW, more than what was required. Estimates by some quarters have quoted additional requirements of only 2000MW.
If the argument put forth in the white paper is to accept that excess capacity had been installed, then, why did PSPCL facing a shortage of around 1700MW this summer, had imposed such long power cuts.
Moreover, power cuts were forced when only one unit of 660MW out of the 1980MW Talwandi Sabo plant had failed. Imagine, what would have been the situation, had there been an outage of 2000MW. Purchase of power from the grid exchange made at rates as high as Rs. 15 per unit this summer would even go higher in case Punjab faces further shortages.
Regarding the issue of making power cheaper, govt. has introduced a bill for referring the agreements to Punjab State Electricity Regulatory Commission for redetermination of tariff. Interestingly, the regulator, having fixed the tariff earlier as per Section 63 of the Electricity Act,2003, will reassess its orders.
Will power become cheaper:
The white paper has failed to pinpoint the real reason for the costly power in the state and that is due to total privatization of the generation in Punjab, a policy pursued by the successive governments.
The share of the state thermal in the total energy of the state has gone down from forty-six percent to a mere three percent and it is lowest in the country.
The white paper neither acknowledges this folly nor contains any proposal for correcting the same. Thus, power purchase is likely to remain costly in Punjab.
The cheaper and good-quality coal from the state’s captive Pachhwara coal mine shall be made available to the private thermal plants unless these plants are acquired by the state. This shall create fertile ground for exploitation of the state’s assets by the private companies.
Conclusion:
To effectively discharge its responsibility for providing cheaper and reliable power to its consumers, PSPCL should have an adequate own generation.
Never in the past has any of the state’s own thermal or hydel plants failed the state due to inadequate coal-stock or otherwise, as did the private sector plants during the peak of this summer and even during the lean month of October.
On another front, the financial viability of PSPCL has been jeopardized since the subsidy has reached an unsustainable level of nearly forty-five percent of the total revenue against the national average of only 16.45 percent.
Delay in payment of subsidy forces PSPCL to borrow more. Theft of electricity causes annual revenue loss of Rs. 1500 cr. and govt. duties in Punjab are the highest in the country, both contributing to the costlier electricity.
Nationalization of the private sector thermal plants, which are up for sale and purchasing these at the appropriate price, holds the key to cheaper power in Punjab. This step shall lead to many other short-term and long-term benefits to the state.
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Er. Bhupinder Singh (Retd), The writer is Retired Deputy CE/PSPCL and Convenor, Power Sector Reforms Forum
bhupinder4103@gmail.com
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