It may be an year of Parivartan for West Bengal, but for the state power sector, 2011 was nothing short of a shocker.
While new projects failed to take off due to land hurdles, power utilities were bleeding like never before triggered by some populist views by the Mamata Banerjee-led Trinamool Congress government. Moreover, when 2011 is closing down, the state power utilities are even staring at a huge loss next year.
STALLING PROJECTS
In 2011, one of the major jolts for the power sector was the snail’s pace at which the major projects in the state were developing.
On one hand, the Banerjee government’s unwillingness to acquire land from those unwilling to sell is delaying a more than Rs 9,000-crore project for a 1,600-Mw unit by NTPC in Katwa. NTPC had taken over the Katwa project from WBPDCL, which had acquired 387 acres of the 1,035 acres required for the project. However, the new government has asked NTPC to set up the 1,600 Mw unit in less than 600 acres of land, due to its unwillingness to acquire land.
On the other hand, NTPC is understood to have dropped or frozen its plan to set up a 1,320 Mw power plant at Santaldih, which might have seen an investment of at least Rs 8,000 crore. The 1600 megawatt power project, as part of JSW’s Salboni plant is also facing procedural hurdles.
For a country, which is striving for clean energy, the new TMC government had in stock one more shocker. The state power minister Manish Gupta had ruled out the setting up of a proposed 1000 MW nuclear power plant at Haripur, following protests from local fishermen communities.
The Videocon Group is also planning to relocate its location for a 1,200 mega watt power plant, which is going to be set up with a 3 million tonne integrated steel plant due to land acquisition issues. The company has so far acquired close to 100 acres of land at Jamuria, while it is urging the reluctant state government to play a mediatory role.
Meanwhile, the work of RP-Sanjiv Goenka Group’s flagship company CESC Ltd’s Haldia project is in progress. According to the company, the first phase of Haldia thermal power plant of 600 MW with an investment of more than Rs 3000 crore is set to be ready for generation in mid-2014.
CESC had recently signed a long-term strategic deal with Chinese power equipment company Shanghai Electric Group, that might lead to joint ventures for ultra mega power projects in future. A deal was also signed with the Chinese fir for supplying boilers, turbines and generators to the Haldia Thermal Power Project.
Another major foreign tie up that happened in the state’s power sector was the West Bengal State Electricity Distribution Company Ltd (WBSEDCL) signing an agreement for technological collaboration with Singapore Power (SP), one of the largest power companies in Asia.
PRICE PUZZLE
While projects failed to take off, rise in coal prices and the unwillingness from the part of the government to increase tariff has left the power companies in lurch.
According to official sources, the state firms are facing a combined loss of Rs 225 crore per month, while the government is refusing them to hike tariff. Despite approval from the state regulator, the West Bengal Electricity Regulatory Commission (WBERC), for a tariff hike this financial year, the Banerjee government reversed the decision, leaving the companies in trouble. The discom has been collecting Rs 4.27 per unit — the 2009-10 tariff.
This amounts to under recoveries of Rs 1.33 per unit, resulting in a revenue loss of above Rs 2,500 crore for 2011-12, against the power ministry's projected sales of 19,000 million units. If allowed, the average tariff would stand at around Rs 5.60 per unit.
“Still we have not approached the regulator for further hike,” said a senior official of a state utility. Though the firms are demanding a subsidy of or some benefits like adjustments in the form of waiver of state cess, electricity duty and interests for certain loans that the utilities have taken from the state government. It amounts to about Rs 1500 crore. Even after that, the loss is expected to be around Rs 1000 crore.
The year also saw the Coal India Ltd refusing to supply coal to the state power producer citing non payment of dues, which ultimately led to short supply during the peak hours. Though there are talks going on for rise in power tariff for commercial purpose, the state government seems to be not in any mood to rise prices for domestic users.
However, the state power sector is now pinning hopes on a better 2012, forgetting the disastrous 2011.
