Haryana’s distribution companies that are power surplus need a financial turnaround to cut electricity cost and line losses besides checking corruption and improving revenue recovery. Punjab’s challenge is to manage its surplus power and consumption after private players gave a boost to generation in 2014. It also needs to be pragmatic than populist as free power to farmers has already cost the state Rs 42,000 crore in 14 years!
Power-packed Haryana reels under outages
What do Bansi Lal, Om Prakash Chautala, Bhupinder Singh Hooda and Manohar Lal Khattar have in common?
Besides being chief ministers over the past 20 years, these leaders or their parties promised the people of Haryana 24-hour power. Though the first three were unable to keep their word, Khattar hasn’t been consistent on 24-hour power. Initially, the Khattar-led BJP government said it can’t assure round-the-clock power, but later it talked of gradually giving uninterrupted supply to select villages.
Despite power distribution companies Uttar Haryana Bijli Vitran Nigam (UHBVN) and Dakshin Haryana Bijli Vitran Nigam (DHBVN) claiming to be power surplus, consumers don’t get assured supply. In urban areas, they put up with outages, fluctuations, and deficiencies in customer care.
The situation is far worse in rural Haryana. Consumers, particularly domestic, bear the brunt of erratic supply despite promises by successive governments.
A bizarre scenario in a state that was not only the first in the country to achieve 100% rural electrification, but where power has always been a politically sensitive sector, especially due to high demand for heavily subsidised agriculture supply. Haryana achieved rural electrification way back in 1971.
The state has come a long way from the days when connecting every house was the target. Today, it has 54 lakh consumers, including 41 lakh domestic ones. The quality of power supply remains a concern despite the state’s 10th position with 3.5% of the country’s installed capacity.
The two distribution companies, created after unbundling of the erstwhile Haryana State Electricity Board, have adequate power from their generation units, the state’s share from central projects and other sources through long-term agreements. However, supply is hampered by constraints in the distribution system. Poor planning, high line losses, low revenue realisation and corruption have made things worse.
“Theft and systemic constraints in distribution are the two biggest challenges. The high rate of theft needs to be controlled and brought down. Deficiencies in distribution network means even paying customers face cuts at times. We also plan to use information technology to improve the quality of supply and services,” says Shatrujeet Kapur, chairman-cum-managing director, UHBVN and chairman, DHBVN.
“As not enough attention was paid to distribution, the losses kept mounting for discoms, creating cash-flow bottlenecks at the transmission and generation end also. Commercial losses, including theft, went unchecked, but not much investment was made to improve the operational efficiency and quality of service of discoms. Massive generation capacities were added without commensurate augmentation of the transmission and distribution system and promoting load growth,” says a power expert.
Haryana’s own generation capacity has been idle for months and surplus power is sold to other states at a loss. With mounting losses, UHBVN and DHBVN look to the state government for bailouts. The two distribution companies have got a breather with the government taking over 75% or Rs 25,950 crore of their total debt under the Ujwal Discom Assurance Yojana (UDAY), but this won’t help them forever.
The discoms will need a financial turnaround. And that’s possible only if they reduce power cost, cut line losses, accurately bill energy supply, reduce corruption and improve revenue recovery.
Problem of plenty, populism in Punjab
Surplus, deficit and surplus again: That’s the story of Punjab’s power sector in the last 50 years. The Punjab State Electricity Board (PSEB), which was carved out of the public works department (PWD) on May 1, 1967, soon after the state’s re-organisation, was split into two companies – the Punjab State Power Corporation Limited and Punjab State Transmission Company Limited in 2010.
The PSEB’s debt-ridden legacy began with the inheritance of a few lakh when it separated from the PWD. In 2010 when it was unbundled, a debt of Rs 16,700 crore was passed on to the PSPCL and PSTCL.
In the absence of any major industry in Punjab, the main role of the PSEB, and later the PSPCL, was to feed agriculture, the primary vocation of 70% of the state’s population.
The PSPCL provides services to 70 lakh consumers, while the PSEB saw a humble beginning with 6.35 lakh consumers, including 4,600 with agriculture pump-sets. Its revenue collection was Rs 23 crore and it grew to Rs 26,000 crore. Five decades ago, the tariff was 5 annas or 30 paise per unit. Today, a unit costs Rs 4.52.
Surge in demand
Over the years, Punjab’s power sector has seen a manifold increase in debt, consumer aspirations and political populism.
The PSEB saw a sudden expansion in 1968. “Power canvassers were deployed to woo villagers to install tubewells. This led to 2 lakh consumers by 1971,” says YP Mehra, who retired as a PSEB member in 1997.
The number of consumers is 14 lakh today, raising the demand from 450 megawatts (MW) in 1967 to 12,000 MW at present.
Before the re-organisation, Punjab generated 48 MW from the Joginder Nagar hydel project and 950-MW Bhakra dam. It achieved total rural electrification in 1976. The 440-MW thermal power plant came up in Bathinda in 1969, the 1,260-MW Ropar plant in 1983 and the 540-MW Lehra Mohabbat plant in 1997.
The state was reeling under acute power shortage till 2007 and before the assembly elections, deputy chief minister Sukhbir Singh Badal decided to bring in private players to boost generation. The government appointed consultants and created special purpose vehicles to set up five power plants at Talwandi Sabo, Rajpura, Goindwal Sahib, Gidderbaha and Mansa.
The Talwandi Sabo, Rajpura and Goindwal Sahib plants added 3,960 MW of generation capacity. It took seven years and constant follow-ups with companies, PSPCL and other stakeholders to build these projects. Finally, things started rolling in 2007 when the first unit at Talwandi Sabo was commissioned.
These efforts were complemented by 580-MW power generated through renewable fuel.
In this surplus scenario, PSPCL may not need to hire canvassers but it needs to streamline management and boost consumption.
The private plants come with a legacy of Rs 2,000-crore fixed charge passed on to the PSPCL even if the latter doesn’t consume the generated power. In a surplus scenario, though the consumers have got a relief from the power cuts they have to pay more as they end up sharing the burden of the fixed cost of the unused surplus power.
PSPCL chairman-cum-managing director KD Chaudhari says, “What PSPCL has achieved in seven years, it did not in 50 years. No doubt we have plenty (of power generated) now but any new thing brought into the system takes time to get adjusted. I am sure in a short span Punjab will start consuming the entire power generated here.”
“The biggest challenge is to match generation with demand. There’s a need to reduce the cost of power, control rising tariff and check line losses,” says Varinder Singh, a former member of the Punjab State Electricity Regulatory Commission (PSERC).
The populist measure of giving free power to farmers with agriculture pump-sets in up to five acres during the Rajinder Kaur Bhattal government’s tenure was extended to the entire farm sector during Parkash Singh Badal’s term as chief minister in February 1997.
Between 2002-03 and 2016-17, the state government spent Rs 42,000 crore for free power to the agriculture sector. In 14 years, the amount has risen six fold from Rs 807 crore in 2002-03 to Rs 5,200 crore in 2016-17.
This year, Rs 6,364-crore subsidy is to be paid to the PSPCL, while Rs 1,300 crore is pending.
The appointment of jathedars as district chairmen of grievances redressal forums is another populist step. James Washington Authentic Jersey