States facing Assembly elections later this year have been resorting to massive electricity purchases from the spot market.
India generates 911,000 million units (MUs) of power annually. Around 90 per cent of this is sold through long-term Power Purchase Agreements. The rest is sold in the short-term market through four channels - power exchanges, bilateral trade between state utilities, through power traders and Unscheduled Interchange.
Average prices in the short-term market have risen 12.5 per cent from Rs 3.2 a unit in March 2012 to Rs 3.6 a unit in March this year. That, however, has not deterred states from massive purchases.
Rajasthan, where elections are due in October, bought 225 MUs from power exchanges in March, the latest month for which data is available. For comparison, the state had bought 179 MUs from exchanges in the same month last year. Rajasthan's power purchase through the bilateral trade route also jumped from 61 MUs in March last year to 428 MUs in March this year. The massive and costly purchase comes as Chief Minister Ashok Gehlot's Congress government in the state is engaged in beating a strong anti-incumbency sentiment. This comes in the backdrop of two recent rate increases, 22 per cent in 2011 and 18 per cent in 2012, which have given its distribution companies (discoms) room for more purchases.
Similar costly power purchases made during the Assembly elections in 2008 and the general elections that followed in 2009 brought Rajasthan to a position where the accumulated losses of its discoms currently stand at Rs 50,000 crore. Power was bought at a little over Rs 8 a unit from the exchanges then. This is in stark contrast to the Rs 2.76 a unit average price at exchanges currently.
Chhattisgarh, which faces elections by November, has also pulled up its power buys from the short- term market recently. While the state normally refrains from power exchanges, it bought 23 MUs in March. It saw a 42 per cent rise in power purchase through bilateral deals, to 183 MUs in March this year against 128 MUs in the same month last year. The Raman Singh-led Bharatiya Janata Party government has a tough task in bringing down the power deficit that has stuck to three to four per cent of the total demand in the past year. It does not come as a surprise the state overdrew 95 MUs from the grid in March, jeopardising grid security. This was more than double its overdrawal in the same month last year.
Jharkhand, going for elections in December did not approach either of the two functioning power exchanges in March. However, it doubled its power purchase from other state utilities through bilateral trade, from 99 MUs in March 2012 to 195 MUs in March this year. Madhya Pradesh, also facing polls, almost doubled its electricity purchase from the short-term market under the bilateral route from 146 MUs in March 2012 to 301 MUs in March this year. Its power buys from the exchanges also went up to 39 MUs in March this year as compared to 21 MUs last year.
The only exception to the poll-preparation trend is Delhi, which recorded minimal power purchase in March. Power distribution is privatised in the city. Delhi distribution companies bought a mere 13.5 MUs of power from the bilateral route and 11.6 MUs from the exchanges. This, according to sources, is attributed to the surplus 1,000 Mw of power which the discoms have tied-up to tide over the summer season.
MULTIPLYING MEGAWATTS
* Rajasthan bought 225 million units (MUs) from power exchanges in March
* Chhattisgarh has also pulled up its power buys from the short- term market recently. It bought 23 MUs in March
* Jharkhand doubled its power purchase from 99 MUs in March 2012 to 195 MUs in March this year
* Madhya Pradesh almost doubled its electricity purchase from the short-term market from 146 MUs in March 2012 to 301 MUs in March 2013
