Meghalaya power sector: A leaking bucket

 

SumarbinUmdor

Electricity is a blessing of science and an indispensable part of our daily lives. As the economy is reeling under the impact of Covid-19, availability of reliable power supply becomes all the more important for stimulating economic development. Today, when teaching has moved online and work from home is the new normal uninterrupted power supply has become more important and imperative for social development and progress. In such a situation, the recent 11 hours power load shedding and continuing uncertainty over power supply is an unprecedented crisis to have hit the state. While it is clear to all that state governments of the last two decades are responsible for not timely addressing the deterioration in the operational and financial performance of the power sector, the allegations of corruption in power projects such as the Asian Development Bank (ADB) funded smart metering project and  Saubhagya Scheme, among others, in the midst of the present power crisis has understandably  aroused indignation and outrage among the public and even from coalition partners of the present government.

Meghalaya has a hydro power potential of 3000 MegaWatts (MW) while the present state owned hydel power plants generate only about 12 percent of this potential.Meghalaya peak electricity demand at 400 MW has almost doubled in the last 16 years for which the state has been increasing depending on power purchased from central hydro and thermal generating  companies. Meghalaya was once power surplus with sale of power by the then unbundled state-owned power utility (MeSEB) in 1997-98 at 234 million units (MU) against purchase of power of 78 MU.  The state enjoyed low power tariffs and load shedding was an exceptional event which otherwise was a regular experience in the rest of the country. Since then, the situation has slowly deteriorated with the state having to endure long hours of power cut and load shedding while the power situation in the rest of the country has comparatively improved. So what has happened in these last two decades that led to this unenviable situation?

First, we find that there has been an exponential growth in energy sales to industries, particularly power intensive industries, after the implementation of the special northeast industrial policy in 1997-98. This sales of energy to industries drawing high tension and extra high voltage which was about eight percent of total energy sales in 1997-98 reached a peak of 50 percent in 2008-09 and today has come down to 35 percent of total energy sales.  The slow addition to installed capacity by state owned power generation company (MePGCL)along with the surged in demand from industries and domestic consumers (demand from this segment has been steadily rising due population growth and rural electrification schemes)meant that state has had to rely more and more on costly power from central power utilities particularly during non-rainy seasons and in rainfall deficient years.   In 2017–2018, almost two third of power procurement by the state owned power distribution company (MePDCL) was from the three central power generating stations.

Aggravating this mismatch between demand of power and the ability to meet it from power generation by MePGCL is the high Aggregate Transmission and Commercial (AT&C) losses which at 35 per cent is among the highest in the country and way above the national average of 22 per cent. The lack of funds to upgrade the existing transmission and distribution networks have delayed avoidable reduction in system losses. Further, high commercial losses caused by human factors such as power theft, errors in meter reading, faulty meters and lack of billing discipline have added to the financial woes of power utilities in the state.

The recent statement by the CMD of state owned power holding company (MeECL) that industries are involved in electricity theft and the subsequent counter allegation by employees of the Corporation of undue favour shown by the CMD in lowering of penalties slapped on an industrial unit engaged in power theft are probably indicative of one of a long running financial scam causing losses of crores of rupees to the power sector of the state. The power intensive industries numbering only about 130 out of about 4.75 lakh consumers are both a boon and a bane for the state.  This minuscule consumer consumes nearly 35 to 40 percent of power and pays the highest power tariffs among all categories of consumers. However, the unchecked power theft by this segment is equally detrimental to the financial health of the power sector.

While the average AT&C losses is high, the situation in some of the revenue circles such as in Central, East and West Garo is alarmingly high and has remained so for a long time. The high commercial losses in these circles are attributed to high incidence of power pilferage, unmetered connection, faulty meters and average billing due to existence of defective meters. This is another area where efforts to improve revenue collection through billing and collection discipline are often met with political interference and consumer resistance.Increase in demand from low tension consumers due to expansion of urban population and rural electrification schemes has resulted in unfavorable high low tension to low tension ratio which also contributes to high distribution loss and poor quality of power to consumers.

The above mentioned factors have corroded the financial position of MePDCL manifested in the widening gap between average costs of supply and average revenue earned (Rs. 1.17 in 2018-19) indicating that revenue earned from sales of energy is insufficient  to meet even the cost of power purchase let alone other operational expenses.This has led to piling of unpaid dues along with penalty and surcharge owed to central power utilities landing the state in a pitiful situation where the assurance for settlement of the outstanding  dues given by the state government is not enough to  placate the  central utilities- a big credibility issue for the state government.

State owned power utilities in Meghalaya are plagued by many operational and financial inefficiencies lingering for many years now and measures to address issues call for augmentation of generation (including from renewal energy), supply side management (ensuring  generation, transmission and distribution of energy are conducted efficiently) and demand side management (modify the electricity usage pattern of the customer to bring about efficient use of energy and management of load). However, the situation with the power sector in the state goes beyond technical factors. The issue of corruption in power projects, power theft by industries, lack of political, administrative and community support for stern action against power supply fraught are equally important factors contributing to the present payment and credibility crisis of the power sector. Unless these leakages are plugged, more loans and higher tariffs  will fail  to rescue our power utilities from the financial quagmire that they are in.

For the government of the day, the situation is no doubt very challenging and the corruption allegations in the department tumbling one after another is a serious dent on the image of the government.   However, if the government is able to revive the ailing power sector then it would be a singular achievement that will restore its credibility among the citizens of the state, boost confidence of investors  and financial institutions and  reap rich dividends  in the next election.

The writer teaches at NEHU: Email [email protected]

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