By Rudi Warjri
It is said that sometime in the late 18th century, Benjamin Franklin, sold off his possessions to fund his research of the lightning rod for conducting electricity. In Meghalaya today, funding the generation , transmission and distribution of its electricity means begging for loans from third parties . Even the payment of salaries of employees has to be financially engineered from a loan.
The turmoil in MeECL and its subsidiaries has attracted extensive media coverage . Lots of data and figures have been bandied around. They pertain to revenue, expenditure, loans, corruption , agitation by employees etc., some factual and some distorted, thereby adding regular fuel to the negative public perception. The purpose of the this op-ed is to inform the public about the in-depth malaise afflicting the organization. The public can judge for themselves to what extent they may willy-nilly also own part of the problem. The op-ed being explanatory in nature is also lengthy and has therefore been divided into two parts .
Assets:
The inheritance of the State Electricity Board by the state of Meghalaya from Assam had included both its assets and liabilities . Among the assets was large amount of land worth in multiple crores today. Some of the land are in prime locations – next to National Highways and scenic spots that are ideal for creation of assets and promotion of tourism. Most of the land has been practically lost due to encroachment. Among the encroachers are well placed and influential elite of society. Legally, the land may have been acquired by the State Government and recorded in the Land Registers of the respective Deputy Commissioners office. In practice, however, some private individuals have managed to have the lands registered as their own private property. So land records exist only in name. Few attempts made by the Corporation to survey and demarcate the Corporation’s lands to arrest encroachment (including eviction of squatters) and to settle disputes by way of lease or rent of its lands, have been met with open resistance from the said individuals and even the entire village.
Other assets include dams, power houses, power stations and sub-stations for generation, transmission and distribution activities, worth literally thousands of crores. Electricity towers and cables of all categories stretching over hundreds of kilometers all across the state owned by the Corporation are also worth crores. The Corporation also owns schools (read land and infrastructure) and buildings that it utilizes as quarters and office space all over the State. The main complex that serves as the Headquarters of the Corporation at Lumjingshai, is itself worth crores today. Its Inspection Bungalows located in prime locations are capable of generating huge revenue returns. They needed regular maintenance and repairs. Even with depreciation, these infrastructural, capital and revenue assets together, still have a very high net worth today. A proper inventory and assessment and valuation of these assets, is of utmost importance. Assets also include human resources; in other words the employees of the organization.
Liabilities:
Topmost among the liabilities is financial in the form of mounting debts that it is crippling the organization every moment. Its survival only depends on loans. Paradoxically , the human resource asset is also a liability. There are about 3500 regular employees and an equal number of pensioners and about 1000 contractual employees. The question arises about the ration between the size of the employees and pensioners to the financial capacity of the organization. The other question is the output. To the consumer the frequent power cuts and interruptions speak for themselves. To the management, it is the lack of professionalism in the execution of projects all the way from preparation of basic documents to completion of projects; several of them resulting in cancellation of work orders leading to losses in terms of time, resources and monetarily. The practice of revision of estimates for projects and delay in delivery of services to the paying public with the attending inferences and implications, has become the norm. Accounts cannot be closed on time, as a result of which, the audit process is delayed. Hence the Corporation is unable to stand on a sound footing when it needs to access funds for the implementation of its various projects.
Infrastructure:
The infrastructure of transmission and distribution lines is not as robust as it should be. Their systematic and planned upgradation and maintenance has not been taken up since their commissioning. The Government of India provides funds for the strengthening of the existing infrastructure and the creation of additional infrastructure, which are to be utilized as per the guidelines issued. Failure to adhere to these guidelines entails cancellation of funds in favour of better performing States. This in turn, affects funding for future projects, resulting in loss for the State. Identification of viable projects is therefore extremely crucial.
The Myntdu-Leshka Hydro Electric project has cost the State an enormous sum. It can only generate electricity during the monsoon season. A very advanced and sophisticated monitoring system had been installed for this project. A generator had failed earlier this year, which resulted in loss of revenue running to tens of lakhs per day. This can happen only if the monitoring system was compromised or the data provided by it was not given due attention. A post mortem of the failure should be conducted to prevent the same calamity from happening in other dams of the State as well.
There was a monumental failure of Unit I of Umiam –Umtru Stage IV Power Station which has remained on emergency shut down since August 5, 2019. Till July 2020 the financial loss to the Corporation was about Rs 41 crore. An Inquiry Report on the causes and reasons for the failure was conducted by Mr i Malcolm David Roy, Retd. Executive Director, NEEPCO Ltd. The Report was submitted on August 7, 2020. The Report also carried an observation, “During my visit to the Stage III and Stage IV Power Stations, the condition of housekeeping and upkeep of the Power Stations were found to be extremely poor and unsatisfactory. Such conditions reflect adversely on the plant and its staff and are indicative of the attitude towards these precious assets of the Corporation, which can manifest even in the quality of maintenance of the equipment. Major attention is required towards housekeeping”.
The electricity provided by the MeECL to its consumers comes not only from the power it generates from its own Hydro Electric projects but also from Central Generating Stations outside the State such as NEEPCO, POWERGRID, OTPC, etc. The power procured from these Central Generating Stations during the year 2019-20 was around 2008 Million Units at a cost of Rs 967 crore approximately (excluding transmission charges of around Rs.180 crores), out of which, 238 Million Units were sold outside the State (for an amount of Rs.74 crore approximately). The balance of around 1770 Million Units was available for sale inside the State. However, the total energy actually sold within the State was about 1212 Million Units (at about Rs 713 crores). The balance energy of 558 Million Units is un-accounted for; the loss for which, amounts to about Rs 360 crore, approximately, per year.
Loss:
To a layman loss could be understood only in terms of financial and commercial loss. In addition, there are also technical losses. And technical losses though inevitable at times also add up to the overall financial loss. Further , the technical loss is compounded by a weakened power infrastructure due to wear and tear over the years. The situation is further aggravated by the absence of field officers from their post. Many of them commute from their District Headquarters and are not immediately available when exigencies arise. The delay in attending to exigencies that arise in the field adds to the cost of repair and maintenance.
There is also loss in the actual distribution and consumption of electricity itself, inside the State. This category of loss is caused by theft of power by persons/parties who are not registered consumers of the Corporation and therefore can be deemed to be illegal. It is also caused by inadequate billing for electricity consumed by registered consumers (the rate of realization is only Rs 5.58 per unit against the tariff of Rs.6.54 per unit approved by the Meghalaya State Electricity Regulatory Commission (MSERC). The loss of Rs 0.96 per unit translates into crores per year. This is largely due to non-detection of defective meters and failure to actually read the meters of consumers, as there is no enforcement of these requirements by the field officers and staff. When these failures were detected upon enforcement of these procedures recently, an outcry was raised against ‘inflated’ energy bills. That nobody wanted to verify how this ‘inflation’ came about, is another matter altogether. The deficit in payment of energy bills over the years cumulated in actual financial loss for the Corporation which no one wants to bear or take responsibility for. The shortfall in the income from the sale of power (Rs 360 crores approximately, per year) and the loss from under-realization of revenue is also in crores per year) . All this adds up to a combined loss of multiple crores per year.
The Electricity Supply Code has laid down detailed instructions for the supply of electricity to consumers. If this Code had been complied with, the Corporation would find itself in a much better position financially, today. Somehow, this revenue leakage as a result of non-compliance with this Code, has been overlooked over the years and has probably still not been taken into account, till date. (To be continued)