March 26, 2000

It’s time for consumers to pay up or to protest

For Maharashtrians, the time to pay for the Enron power and other inefficiencies of the state power utility is here. The nearly bankrupt state can no longer avoid the inevitable and the Maharashtra State Electricity Board (MSEB) has proposed a hefty 20 per cent average hike in power tariffs to raise Rs 1,219 crores. Since the costs can no longer be loaded on to already burdened industrial consumers, the MSEB has for the first time proposed a reduction in industrial tariff and an increase in agricultural tariff.
This is a positive development, because industry would otherwise have moved out of Maharashtra. Already the projected industrial growth and consequent demand for power has failed to materialise. Charging agricultural consumers is also a positive development, but it will require the MSEB to first put in place a credible system of metering usage and collecting revenues. However, the situation is bad news for the middle class domestic consumers who will henceforth bear the burnt of price increases. For instance, the present proposal wants domestic users to pay approximately 23 per cent more,and in the lowest consuming bracket of less that 50 units, accept a hike of over 60 per cent.
Maharashtra which boasts of the most expensive power project in the country in Enron’s Dabhol Power Corporation will be the first to test whether consumers will continue to pay for the inefficiency of the monopoly utilities and condone the large scale theft and inefficiency which they cannot control.
In Gujarat, consumers supplied by the Ahmedabad Electric Supply Board, are already agitating against proposed tariff hikes. They argue that tariff hikes will have to be justified and utilities will have to prove that they have negotiated the best possible deal with power producers and done their best to reduce costs, cut transmission and distribution losses and reduce theft. In Maharashtra, NGOs and user groups have already lodged well researched objections to the tariff hike with the Maharashtra Electric Regulatory Commission (MERC). The setting up of the MERC has itself allowed NGOs and user groups to demand specific data from the MSEB to verify its claims.
The first conclusion arising out of this is that MSEB has problems justifying several hundred crores of rupees in costs. Secondly, the Pune based Prayas, an energy research group, based on data submitted by the MSEB has worked the ‘effective’ cost per unit of power supplied by Enron at a hefty Rs 5.95 a unit. It may be recalled that the Shiv Sena-BJP government had repeatedly asserted that the cost of Enron power would not be more than Rs three per unit. As against this, the Tata Electric Supply companies supply power at Rs 1.80 per unit while the National Thermal Power Corporation tariff is even less.
Thirdly, MSEB’s submissions indicate that its unmetered consumption has increased from 30 per cent to nearly 45 per cent of energy available for sale. This would work out to a huge Rs 6,000 crore which is lumped together as T&D losses and agricultural consumption. NGOs allege that suppy to agricultural users is being deliberately inflated to hide T&D losses.
The tariff hike raises several other questions as well. For instance, if Phase I of Dabhol alone has made the state power surplus, what happens when all the on-going projects go on stream? These include, Dabhol phase II (1200 MW), Reliance’s Patalganga project (500 MW), the Mittals’ Bhadravati project (1000 MW +1000 MW), the MSEB’s own projects at Khaparkheda and Koyna and the 495 MW Saphale project sanctioned to the Bombay Suburban Electric Supply (BSES). Another 1000 MW of captive power generation has also been cleared of which over half is already in place.
So far, various political alignments which governed Maharashtra have consistently fudged demand-supply data and exaggerated projected power consumption. An independent study will provide a clear picture of real demand and could be used to force the state to scrap unnecessary projects. In fact, Maharashtra’s cost of power is so high, that even hugely power deficit neighbours such as Karnataka, Andhra and Tamil Nadu are unwilling to buy surplus power. Negotiations have also fallen through because if the state exports power at a cost lower than that charged to domestic users the MERC could open up its sweetheart deals such as Enron.
Consumers should also demand that detailed data relating to power generation, distribution, demand and supply should be compulsorily posted on the internet so that researchers and NGOs can analyse it and disseminate pertinent information. Such a practice has worked well in the USA. Finally there is the question of industrial delinquency. Should the state not be asked to explain how it continues to negotiate with the Mittals, even after their sovereign counter-guarantee has lapsed and the groups’ Dolvi plant owes MSEB nearly Rs 100 crores? There are several other industrial consumers who are simply not paying up. What has MSEB done to recover such dues and has it cut off power supply to them? All these questions need answers before any power hike can be cleared by the MERC.

Updated weekly.

The author's e-mail address is: suchetadalal@yahoo.com

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