A K Bhattacharya: Battle royal over a BHEL clone

RAISINA HILL

At the heart of the battle is the inability of the power ministry to meet the Tenth Plan generation targets.

Two ministries in the Union government have been engaged in a bizarre game since the middle of last month. The Power Ministry is keen that the state-owned National Thermal Power Corporation (NTPC) should set up a new company that will be manufacturing power equipment to meet the demand-supply gap in this sector. The new company will be a clone of Bharat Heavy Electricals Limited (BHEL) and the proposal has the full backing of the power minister, Sushil Kumar Shinde and the power secretary, R V Shahi.

But the Heavy Industries Ministry, under whose administrative control BHEL functions, has not taken kindly to this proposal. It has argued that BHEL's capacity utilisation is at present only 66 per cent and has, therefore, questioned the purpose for which the proposal to set up a BHEL clone has been mooted. What's more, BHEL is investing more in its existing capacity that will allow it to supply power equipment with a generating capacity of 10,000 MW every year. This should be adequate to meet the equipment demand for generating 50,000 MW over a five-year period.

So, where is the need for NTPC to set up new capacity to produce power equipment? And, in case, NTPC is allowed to go ahead, Heavy Industries Minister Santosh Mohan Dev is ready with a retaliatory move by asking BHEL to enter into power generation and set up power projects with its own power equipment. If NTPC can think of backward integration, BHEL too can plan forward integration! In short, a battle royal is on the cards, with two ministries using public sector units under their control scoring points against each other, little caring that such a face-off can do no good to the country's power situation.

At the heart of the problem is the Power Ministry's failure to meet the Tenth Plan target for adding fresh power generation capacity. The original target of 41,000 of fresh capacity was already reduced to 36,956 MW at the time of the mid-term evaluation of the Plan. And now, latest estimates show that only 17,744 MW of new capacity has been added so far. The Power Ministry is hoping to add 12,898 MW of capacity in the remaining four months of the Tenth Plan ending on March 31, 2007.

The original target has already been scaled down. And even the revised target will be missed. And there are serious doubts on whether 12,898 MW of new capacity can be added by March 2007. This is going to be a tall task. Over 72 per cent of what was achieved in four and a half years by way of creating new power capacity is proposed to be added in less than four months.

No wonder, the blame game has started. A convenient scapegoat in this exercise is BHEL, which is being accused of not having met its delivery schedules. At the power ministers' conference held last month, BHEL chairman A K Puri appeared very agitated when accusing fingers were being pointed at him. He wanted to respond to the charges. His turn came at the fag end of the conference. But by the time Puri presented his case, most ministers had left and BHEL had already begun looking like the culprit. The Heavy Industries Ministry's counter proposal for BHEL to enter into power generation was an outcome of this blame game.

It is naive to believe that the ongoing blame game has nothing to do with the imminent change of guard in the power ministry. Power Secretary R V Shahi's extended tenure is coming to an end next month. The post of the chairman of the Central Electricity Regulatory Commission (CERC) will also fall vacant in March when Ashok Basu completes his five-year tenure. The powerful IAS officers lobby is keen that the post of the power secretary, which it has been deprived of for the last five years, returns to a civil servant and a retired IAS officer is once again chosen to be Basu's successor.

The Search Committee set up to select the new CERC chairman will complete its short-list by the middle of this month. There are many contenders for this job and Shahi may well be one of them. But there are quite a few economists, in the government and outside, who are also in the race.