Mahadiscom plans hit political jams

Plans of making power-buying states to come together delayed due to elections.

The Maharashtra State Electricity Distribution Company (MSEDCL) has, over the past eight months, been trying to create a group of power-buying states like Punjab, Haryana and Uttar Pradesh, in an attempt to bring down the rising prices of electricity. However, state-level electoral politics is proving to be the biggest hurdle in its attempts.

"At present, if we take India as one electricity market with 1.23 lakh Mw generation capacity, the gap between demand and supply is between 8-11.6 per cent during peak hours. What we have as a result is a sellers' market. But if a few of the major power-buying states come together, and refuse to buy electricity beyond a level, prices will have to crash," said a senior energy department official closely involved in the effort.

Punjab is scheduled to go for assembly elections early next year while Uttar Pradesh will go to polls in mid 2007. And with elections approaching, politicians are forcing state power utilities to buy power at whatever price it is available.

MSEDCL has been buying around 300 Mw from electricity traders around the country at prices close to Rs 5 per unit. With the monsoons, the state's demand for power has come down in the last two months, but will peak again from October once the rabi season begins. The state then faces a peakload shortage of 3,500 Mw and baseload shortage of 800 Mw.

MSEDCL brought 23,272 million units from sources other than Mahagenco and paid Rs 5,300 crore for it. This includes power purchase of 3,900 mega units (MU) from traders for Rs 1,400 crore.

During the current financial year, MSEDCL is expected to buy 30,000 MUs and from sources other than Mahagenco 9,000 MUs. It will pay Rs 3,000 crore for this power.

"What we are trying to do is to form a caucus that will say that we will not buy power from traders or generators at more than Rs 3 per unit, even if that means some more hours of load-shedding. This will bring enormous benefit to consumers in the long run as they will not have to face tariff hikes," the official said.

"But ever since we started the attempt last year, due to either local elections or assembly elections in one or the other state, our efforts have not borne any fruit," he said.