People's Democracy
(Weekly Organ of the Communist Party of India (Marxist)
No. 31
July 05, 2012
|
Vol. XXXVI
No. 31 July 05, 2012 |
Andhra
Pradesh in Power Crisis M
Venugopala Rao THE neo-liberal
policy approaches of the central
and state governments have landed Andhra Pradesh in a
major crisis of the power
sector. This crisis is three-fold in nature – shortage for
power ranging from
40 to 50 million units per day, with resultant power cuts
affecting all sectors;
very exorbitant and unbearable burdens on the consumers of
power in the form of
hefty tariff hikes and fuel surcharge adjustments (FSA) of
unprecedented magnitude;
and lastly the dire financial situation of government’s
power utilities. This
is the kind of crisis that the implementation of the
neo-liberal reform process
for almost two decades has engulfed the state in, contrary
to the claims of the
protagonists of the reform process that it would ensure
supply of adequate power
at reasonable prices to the consumers. Power tariffs
have been hiked by Rs 1400 crore
in 2010-11 for a period of eight months from August to
March, by Rs 641 crore
for the year 2011-12 and by Rs 4442 crore (later reduced
by about Rs173 crore) for
2012-13. The AP Electricity Regulatory Commission has
given its orders
permitting the claims of the four power distribution
companies (Discoms) for
collecting FSA from non-agricultural consumers to the tune
of Rs 1649 crore for
2008-09 and Rs 1481 crore for 2009-10. Legal litigations
are going on against
these orders. The public hearing by the Commission is also
going on regarding the
FSA claims of the Discoms for the two financial years
2010-11 and 2011-12 to
the tune of about Rs 7314 crore. The Discoms have already
filed their FSA
claims for the first quarter of the current financial year
to the tune of about
Rs1400 crore with the Commission. These hefty burdens are
being imposed on the
consumers of power, even after the government is providing
subsidy to the tune
of Rs 1182.14 crore for 2008-09, Rs 3486.15 crore for
2009-10, Rs 3652.83 crore
for 2010-11, Rs 4145.75 crore for 2011-12 and Rs 5531.67
crore for 2012-13. SEVERE SHORTAGE Despite having an
installed capacity of about
16,400 MW, which the Discoms can get under power purchase
agreements (PPAs),
the state is facing severe shortage for power and imposing
power cuts for
longer durations. Every
day, power cuts
are being imposed for three hours in Hyderabad, Tirupati,
Visakhapatnam and
Warangal, for five hours in district headquarters and
municipal corporations, and
for six hours in towns, municipalities and mandal
headquarters, while rural
areas are supposed, going by official declarations, to get
power supply for
lighting from 6 pm to 6 am and supply during day time is
ensured along with
supply to agriculture only. Power holidays are being
imposed on all industries,
except small scale industries, for three days in a week or
12 days in a month,
while small scale industries are subjected to power
holidays for two days in a
week or 8 days per month, and poultry, rice mills and cold
storages are
subjected to 40 per cent power cut per day.
In addition, evening peak restrictions in power
supply to all industries
are being imposed from 6.30 pm to 10.30 pm daily. According to an
official declaration,
Singareni Collieries Company Ltd., drinking water,
government hospitals,
railway traction and defense establishments are exempted
from power cuts and supply
to agriculture is being ensured for seven hours a day in
two or three spells.
The magnitude of these power cuts is unprecedented in the
state. In practice,
the duration of power cuts exceed the declared schedules
due to various reasons
like periodical forced outages of generating units, etc. As per a
presentation made by AP Transco and the
Discoms to the chief minister on July 2, 2012, the Discoms
have to receive a
hefty sum of Rs 11,111 crore from the government for
additional power purchases
made by them at very high prices from alternate sources in
the uncontrolled open
market from 2008-09 to 2011-12 in the face of power
shortages in the
state. These
purchases were made at the
behest of the government and under the condition that the
loans taken by the
Discoms for this purpose, along with interest thereon,
would be redeemed by the
government. The
Discoms have claimed
that they have to collect a sum of Rs 9452 crore under FSA
from consumers for
2009-10 to 2011-12. In
addition, they have
to receive Rs 214 crore from the government towards supply
of power generated
using Regasified Liquefied
Natural Gas (RLNG)
and supplied to small scale
industries during a part of the summer period as per the
decision taken by the
government. They have to receive dues to the tune of Rs
1216 crore from
different departments of the government and local bodies.
The Discoms have
liabilities almost equal to their receivables – Rs 5700
crore to AP Genco, Rs 1810 crore to AP Transco, both state
government’s utilities,
Rs 13,084 crore to various banks and Rs 1113 crore to NTPC
and NLC. Thus, all
the power utilities of the government, especially its
generating company, AP
Genco, are literally on financial “ventilator”. REASONS
FOR THE
CRISIS The reasons for
the crisis in power sector are
both short-term and long-term. Against an installed
capacity of 2770 MW of nine
gas-based projects with whom the Discoms had PPAs, only
about 1170 MW of
capacity is being generated due to failure of the
government of The Congress
party and its state government, despite sending
the largest contingent of its
MPs to the Parliament from the state, have failed
miserably to bring necessary
pressure on the government of India to ensure adequate
supply of natural gas to
the power plants in the state. Their failure to get
allocation of natural gas
to AP Genco’s proposed gas-based project with an installed
capacity of 2100 MW
at Karimnagar for the last four years, thereby stalling
its construction,
despite achieving financial closure long time back, is
glaring and intriguing,
especially when gas is allocated by the government of
India to merchant power
plants like Lanco’s extension project and GMR’s
barge-mounted project. Though
the Ramagundam thermal power plant of 600 MW of BPL
continues to fail to take
off even after an abnormal gestation period of more than
one and a half decades,
the government of Another reason
for shortage of power and
increase in cost of generation of thermal power in the
state is the deliberate
failure of the government of Added to these
problems are scanty rains and
meager inflows into reservoirs in the state, resulting in
minimal generation of
hydel power. For example, generation of hydel power was
175 MW against an
installed capacity of 3935 MW as on July 30. Serious
blunders committed in the
past in entering into PPAs with manipulative terms and
conditions with private
power plants continue without rational correction, imposing
avoidable burdens running into
hundreds of crores of rupees every year, with legal
litigations unresolved in
courts of law and the regulatory commission. PAMPERING
PRIVATE
FIRMS Apart from the
existing installed capacity of
16,400 MW, the Discoms have already entered into PPAs with
proposed and
upcoming power projects of AP Genco, NTPC, Singareni
Collieries and others with
an estimated installed capacity of about 25,000 MW. If necessary
steps are taken to see that
these projects are implemented in a phased manner, adding
an installed capacity
of about 1500-2000 MW per annum, ensuring allocation and
timely supply of
adequate quantum of required fuels at reasonable prices,
the state would
overcome power shortages within a few years.
Instead, the
central and state governments, have
created shortages for power with their neo-liberal policy
approaches of
neglecting and hindering the progress of the projects of
public sector
utilities and pampering private sector. At the same time
they are forcing the
Discoms to purchase power on short-term basis from
alternate sources in the
open market at very high prices in the name of overcoming
such shortages on the
other hand! For the financial year 2012-13, the regulatory
commission, in its
tariff order, has
permitted the Discoms
to purchase about 13,281 mu with a ceiling price of Rs
4.17 per unit
on short-term basis and later
revised the ceiling price to Rs 5.50 per unit on an
application made by the
Discoms, without examining alternatives and without
holding any public
hearing. This
would impose an additional
burden of Rs 1.33 per unit or Rs 1766.37 crore on the
consumers of power and
prepare ground for FSA claims by the Discoms during the
current financial year. During the
earlier public hearings of the
commission, we have repeatedly pointed out that annual
revenue requirements and
revenue gaps of the Discoms are being deflated
artificially with a view to
reducing the need for subsidy to be borne by the
government and showing that
there were no tariff hikes or that the hikes were not high
to hoodwink the
people, especially during pre-election periods and that
would lead to
imposition of heavy FSA burdens on the consumers later.
Experience has
confirmed the validity of our contention. In the light of
successive annual
tariff hikes and abnormal FSA burdens, those who
participated in the public
hearing in public interest, including B V Raghavulu,
secretary of the state
committee of the CPI(M) and member of its Polit Bureau,
and K Narayana,
secretary of the state council of the CPI, have demanded
the government to
provide subsidy to avoid imposition of FSA burdens on
consumers. However, chief
minister N Kiran Kumar Reddy has
stated that out of Rs 11,000 crores spent for purchasing
additional power
during the last four financial years, the government would
bear Rs 6000 crore
and that the consumers have to pay Rs 5000 crore. He also has said
that there would not be FSA
for the current financial year, ignoring the fact that FSA
claims for the first
quarter were already filed by the Discoms and that the
arrangement of FSA is
continuing to be in force. The CM’s contention that the
consumers have to pay
Rs 5000 crore is also untenable, because those additional
purchases exceeding
the limits, both in terms of quantum and price, determined
by the commission in
its annual tariff orders were made at the behest of the
government and under
the condition that it would bear the entire amount,
including interest on
loans, spent for such purchases. As
such, that amount cannot be included in FSA claims and
cannot be collected from
the consumers. It
is in this background
that the ten Left parties, including the CPI(M) and the
CPI, and mass organisations,
and even associations of small and medium industries, are
agitating against
these abnormal burdens and heavy power cuts. (The
author participated in the public hearings conducted
by APERC as a power sector expert)
