Why power is costly in MP

NK SINGH

One of the biggest achievements of Shivraj Singh government is the six-fold increase in power generation capacity during his tenure. It jumped from 2,900 megawatts to 17,500 megawatts.

The icing on the cake was Madhya Pradesh becoming a power surplus State four years ago. At present it is producing 7,500 MW as against the demand of 5,500 MW. There is so much power available that often it sells surplus electricity at throwaway price to energy-deficit States.

It is a welcome change from the previous Congress regime, when MP was reeling under an acute power shortage.

The law of demand and supply demands that when something is available in plenty, it’s price ought to go down.

When farmers in MP grew more tomatoes than market could absorb, they had to throw away their produce a few months ago. Last year, the State Government had to bail out onion farmer when supply outstripped demand. It spent Rs 77 crore from its coffers by fixing minimum support price.

Like onions and tomatoes, electricity is also a perishable commodity.

Costliest power

Despite abundant supply, electricity consumers in MP are forced to pay through their nose. Electricity in MP is costliest in the country. Only consumers in Mumbai have to pay slightly more than MP.

The State keeps raising tariff constantly. in 2016 it introduced backdoor methods of price increase like fixed charges and minimum consumption charges, inflating the domestic consumers’ bill by almost 20 per cent.

The exorbitant rates have become a source of strife. Last year an engineer of the power utility was beaten to death in his office at Bhopal over alleged excessive billing.

MP is celebrated for joining the elite club of power surplus States. But its overall performance is a cause of concern. The central power ministry carries out an annual health check up of different States. MP’s performance looks awful.

Its three distribution companies secured respectively 20th, 22nd and 26th rank among the 40 entities evaluated. It was way behind its younger sibling, Chhattisgarh that secured 13th rank, and the traditional laggard Bihar which finished 17th.

Power theft has increased in MP

The audit shows that power pilferage has actually increased in MP. The billing efficiency continues to be low and employment cost high. MP State Electricity Regulatory Authority had ordered the state to ensure cent per cent metering by 2014.

But the state has even now more than five lakh unmetered domestic connections and about 2.41 lakh unmetered Distribution Transformers from which farmers get their supplies.

Ironically, being surplus in power does not necessarily ensure availability of power, especially in rural area. In January 2017 farmers blocked the state highway near Ichhawar in Sehore district complaining that their crops were ruined due to non-availability of power. It was an apparent outcome of poor maintenance of facilities and faulty distribution network.

Another reason of high cost of electricity is the State Government’s long term power purchase agreements with private power generation companies. It is required to pay fixed charges to these companies whether or not it buys electricity from them.

So on the one hand, it has to close down or reduce generation in its own plants during lean season. On the other hand it has to purchase power at an average rate of Rs 4.01 per unit and then sell it at an average rate of Rs 2.47!

The main reason for exorbitant cost of power in MP is blatant pilferage, huge number of unmetered connections and subsidised power supplied to farmers. Theft takes place under the nose of the administration, not in remote rural areas, as one would like to believe.

Sprawling shanty towns and illegal colonies in urban areas just hook up to supply line. The distribution companies dare not disconnect these lines without police force.

Lessons from Gujarat

One indicator of pilferage is figure for aggregate technical and commercial losses. The best performing power supply company in Gujarat has only 8.53 per cent AT&C losses.

The State Government lacks political will to stop theft. It affects their vote banks: the urban poor living in shanty towns and farmer who have become used to subsidised power.

Union Power Minister Piyush Goyal told power ministers of States to take action against theft: “Don’t think that you will be politically affected.” He gave example of Gujarat where Narendra Modi during his stint as chief minister turned around the loss-making power sector within a short span of three years without increasing the tariff.

In 2002 Modi cracked down on electricity theft, with his government filing more than a lakh FIRs. In the power ministry’s latest report, all the three companies placed in the coveted A+ category belong to Gujarat.

Ultimately, people who pay for the largesse of the MP Government are the honest taxpayers. Electricity tariff will keep going up in MP because cost of power generation and distribution as well as staff salaries will keep increasing year after year.

Metered consumers like us pay for the political agenda of powers that be.

My weekly column in DB Post of 8th Jan 17
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