Solving the Power crisis

By Shailang Marbaniang

Much has been written and debated in the media on the present power crisis faced by consumers in the state. Fingers have been pointed in the wrong directions, much blame has been heaped on the state’s own power corporation and everybody is groping in the dark trying to find a way out of this darkness.

To solve this recurring problem, one must make an in- depth study on the subject and not merely jump to conclusions. A long term solution which will solve the problem once and for all has to be found. Short term measures will give us but a temporary respite. Causes that made MeECL unable to meet our expectations must be found and appropriate remedial measures must be taken. Having said that, we should understand that MeECL alone cannot cater to the growing demands of power in the state. Therefore, involvement of private players in the power sector should be encouraged. Meghalaya has abundance of coal reserves and good hydropower potential. But how do we encourage private players to take part in the development of this sector? Way back in 2007, the state government had inked deals with private players on this issue, but not a single deal has taken off. What are the reasons for this? What are our solutions to the recurring power shortage?

The reasons that have brought about this present crisis may be divided into two categories:- (a) those relating to the state – owned MeECL and (b) those that affect and discourage private investment in the state’s power sector.

The reasons that have made MeECL unable to meet the expectations of the people and the possible solutions are, perhaps, the following:-

1) High revenue losses: A recent news item highlights the huge revenue loss suffered by MeECL, which is a staggering 80% in some districts of the state. Anybody would understand that with such heavy losses, no government how rich it may be, would be able to bail out MeECL. It is, therefore, essential for MeECL to plug this loophole. But this is easier said than done as MeECL alone with the financial crunch it is facing coupled with shortage of man power in the field, is ill-equipped to tackle this problem. It is here that the state government, social organizations, local dorbars and the people at large should work together with MeECL to eradicate the menace of power theft and bring down the losses. Financial assistance by the government to the cash- starved MeECL should be given to enable the corporation to implement measures such as installation of prepaid meters, energy audit, etc which will cut down the losses. Social organizations should enlighten people about the menace of power theft and local dorbars should issue warning to the local residents that anybody found stealing power in their localities would be held responsible for power cuts and would face consequences. MeECL should have a strong vigilance wing which shall work together with various authorities to ensure that power theft is brought to the minimum, if not altogether eradicated.

Meghalaya at present needs about 2000(two thousand) million units of energy a year to meet its requirements. If 10% of this energy is lost, the state would lose about Rs100 (one hundred) crore of revenue a year, considering an average sale rate at Rs. 5 per unit. Imagine what a loss of 80% would do to any organization! It would simply lead to its collapse.

2) Pension liabilities: In March, 2010, when the erstwhile MeSEB was unbundled into three separate and independent entities- Generation, Transmission and Distribution- as required under the Electricity Act, 2003, the state government was required to contribute, in case of any shortfall, to a corpus fund to meet the pension liabilities of employees of the erstwhile MeSEB who retired till March 2010. However, till date no such contribution was provided by the state government and pension of these employees amounting to crores of rupees annually has to be met from the meagre resources of the new entities. This money could have been used to pay some of the power dues of MeECL had the state government kept its commitment and contributed to the fund.

3) Inadequate tariff:- The power tariff in Meghalaya is among the lowest in the country. While the average tariff in many states is in the range of about Rs. 6 (in Tripura) to Rs.10 (in Maharashtra), in Meghalaya it is hardly Rs. 5 per unit. This low tariff may not be sufficient to meet the requirements of MeECL and may, perhaps, affect its financial health leading to its poor performance. The public should realize that blind opposition to tariff hikes is detrimental in the long run. Quality power comes at a price and is not cheap. Therefore, everyone must be ready to pay for it.

4)Absence of hydro-thermal mix: Power demand is divided in to two categories- base load demand or demand that is more or less constant throughout the day and peak demand or demand that rises and falls suddenly such as when everybody switches on the lights when it gets dark and switches them off when going to sleep. While thermal power is well suited to meet the base load demand, on the other hand, hydropower stations with their quick startup and shut-down, are best suited for meeting the peak demand. An optimum hydro -thermal mix is necessary for an efficient power system. However, it is not advisable for MeECL to go for thermal power generation at this stage unless it first addresses its financial problems. At present, MeECL is unable to pay for its power purchase because of financial constraints. There is, therefore, no guarantee that it will be able to pay for its fuel purchase or cost of its mining operations required to run its thermal power stations should it decide to have its own mines.

Coming to private participation in the power sector, the following issues may have to be given proper attention if private investment is to be encouraged:-

1) Profitable power market: The north-eastern region does not have much power demand compared to other regions in the country. The `chicken- neck` corridor linking the region to mainland India is a bottleneck which restricts the transmission of power from the north-east to other regions. During the monsoon season when hydropower stations run to their full capacity, there is surplus power in the grid which is sold at throwaway prices. Now, with the coming into force of the `Deviation Settlement Mechanism` which restricts injection and drawal of power into and from the grid strictly as per schedule, one cannot generate power and send it to the grid at will. This will greatly impact on hydro power stations whose generation capacities fluctuate according to the fluctuating water levels during the monsoons. It is, therefore, important to open up the power market to Bangladesh which is not restricted by any geographical feature for marketing this surplus power, that may otherwise go to waste. Bangladesh depends solely on fuel-based power stations and has acute shortage of peak power which sells at more than Rs. 15 (Rupees fifteen) per unit. However, only a certain percentage of the power generated in the state or surplus power during the monsoons should be allowed to be sold to Bangladesh, while the rest has to be sold in the state to meet its own requirements. This will, perhaps, encourage private investment in the state`s power sector once a lucrative market for power is available. This will also help MeECL earn handsome revenue from sale of surplus power during the monsoons in the Bangladesh market.

2) Examination and clearance of projects: Meghalaya does not have an expert body to examine/ study and issue techno-economic clearance to project proposals. For projects with an investment cost of Rs. 500 crore and above (likely to be revised to Rs 1000 crore and above), the Central Electricity Authority in the Ministry of Power, Govt. of India, is the expert body which issues such clearances. However, for projects below this limit, clearance to the project proposals has to be given by the state government. This requires an expert body to take up the clearance process to ensure that the projects are technically and financially viable and utilize the optimum potential.

3) Land problem and local issues: Acquisition of land for any project in Meghalaya is a major problem. Most projects get stuck up because of non-availability of land. The government should look into this aspect and should ensure that landowners get a fair share of compensation. They should also be made stakeholders in the project. Infrastructure in the project area and the surrounding villages such as roads, schools, health care centres, etc. should be developed as part of the project plan. Employment should be given to local people in the project. Free power should be given to the villages near the project area. Creation of a development fund from a certain percentage of the proceeds earned by the developer from sale of power shall be opened for the upliftment of the villages. This will go a long way in solving the problem of land acquisition in our state.

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