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Lessons Kolkata must learn from the Maharashtra power crisis

Thursday, 4 September 2014 - 1:00pm IST | Place: Mumbai | Agency: dna webdesk

Mumbai has surely not put its act together when it comes to electricity distribution throughout the city. A case in point is the recent power blackouts throughout the city due to not just a technical problem faced by Tata Power, but as dna reported, due to a face off between state run electricity distribution company BEST and Tata Power. This brings forth how the real implementation of the Electricity Act, 2003, has been shoddy. The cities in India where power has been privatised are Kolkata, Mumbai, Delhi, Greater Noida (UP), Ahmedabad, Surat, Ranchi, and the track record has not been great. The problems of the state electricity boards (SEBs) has been discussed at length but never been resolved.

With losses amounting to more than Rs 2 lakh crore, the state governments are not even in a position to bail them out. Energy ministers of five states are urging Piyush Goyal (Minister of State (Independent Charge) for Power, Coal, and New and Renewable Energy) to intervene after Adani Power and Tata Power shut down multiple plants, forcing these states to face multiple power blackouts. The city of Kolkata seems far away from this load-shedding, but a closer look will reveal it is not that far away from the power mess as well, and will need drastic reforms to fix the issues.

West Bengal has two major power distributors, CESC and the West Bengal State Electricity Distribution Company (WBSEDL). CESC has the monopoly of distributing power to over 2.3 million consumers in Kolkata and Howrah, while the state-owned discom takes care of the rest of the state. CESC has to handle a demand of 2040MW at the very best. They have their own generating capacity of 1200MW in the state. With the two plants that are nearing completion in Haldia, they will add another 800MW of power, which will make them fairly self sufficient. The company buys excess power required from the state electricity board and supplement it with other sources if possible.

A source close to the company said that right now the company will focus on its delivery on Kolkata and Howrah and has no plans to expand distribution base in the state. However, they will now be actively participating in the distribution of electricity in Ranchi. The plant coming up in Chandrapur in Maharashtra will not be used for West Bengal. So is everything fine with the distribution as handled by the city of Kolkata? No.

CESC, in 2013, had asked a whopping compensation of Rs 2,187 crore from the West Bengal Electricity Regulatory Commission for a hike in factor costs like that of coal and copper. CESC has a large segment of consumers which consume less than 50 units a month and do not provide high tariffs to the company. The government in Bengal, according to media reports, has been cancelling power purchase agreements with various generators closer to 1000 MW, which includes players like Lanco Infratech and JSW Steel.

The reason is with very little industries coming up in the state, West Bengal has been a power surplus state. Even the state electricity board has had 105 MW surplus power for the last two years, and the state also exports power to Bangladesh. So the question remains whether other private players will try to enter the distribution market in Kolkata. Another source close to CESC explained, “It is not a monopoly situation, in the sense the  market is open to all players. But one has to give assured electricity which is of high quality and low cost. Maybe the other players do not find the rate at which CESC supplies electricity as feasible.” 

The Trinamool Congress, while in the opposition, had complained that the CPIM had supported the CESC in many ways, which were not in the spirit of competition. At that time, the CPIM had said bringing competition in Bengal would only increase the chaos. But now that Mamata Banerjee is in power, she is in no hurry to make the space competitive as well. While CESC chief Sanjiv Goenka formed a part of the delegates who went along with her to Singapore, Goenka came back and praised her, saying it was the perfect business tour he had made in recent times.

While the Electricity Act of 2003 wants to create a market competition which is in the spirit of more competition and better customer service, a competitive structure in Mumbai (which increasingly resembles a monopoly in few hands) or a monopolisitic situation in Kolkata, both seem to be failing the people. It is time, that the government pulls up its socks not just to fix the generation, but also power distribution woes in the country.

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