As consumers in Orissa were bracing to face the summer, power tariff hike came in as big shock. While they are being made to believe that the hike was unavoidable as hydro power generation has suffered a lot owing to low rainfall, this report finds that the reservoirs are in fact teeming with higher levels. Definitely there is something fishy in the whole episode.
The order of Orissa Electricity Regulatory Authority (OERC) to hike power tariff has jolted a big shock to the people of Orissa. “It’s a big and unnecessary increase”, fumes Bhupinder Singh, the leader of the opposition in Assembly. Even the industry-wallahs are very unhappy with it. “We did not expect the hike to be so steep. It will take the competitive edge out of Orissa,” rues R K Jena, chairman, CII's Orissa State Council. While it has shocked most, a minority section of the society justifies it by arguing that “It was long overdue as Orissa continued with the same tariff structures since 2000”. When every other commodity has become costlier, this justification succeeded in soothing many. “May be, there was no other way out”, Sujit Nath, a student of Pharmacy in Bhubaneswar, tries to reason out.
While people slowly come to terms, a deceptive strategy - which was in all probability well planned and executed – was succeeding on its objectives. The focus of objection has been on the steep rate of hike rather than on whether the hike was warranted at the first place or not. And this was the plan to lead people that way. They wanted people to focus their attention on lesser important things. People are shouting about the end result while remaining ignorant about the mischiefs that have been played to achieve that result. There is enough evidence to suggest and prove that the condition of ‘severe power shortage’ has been an artificially created one aimed at achieving many objectives – power tariff being just one among those. And hydro-power production has been the most preferred tool to create that condition.
Loss – A deliberate creation
Raising the tariff structure, OERC has noted that the Grid Corporation (Gridco) – which buys power from producers and sells to distribution companies – has suffered huge losses and by the end of year 2009-10 the loss may well surpass 1,500 crore rupees. While the loss to Gridco is true, not many people know that the loss was - to a large extent - an outcome of very low power supply from Orissa Hydro Power Corporation (OHPC), the state owned corporation that owns hydro-power units in Orissa.
The Gridco procures power from various sources at OERC fixed rates. As per the process, Gridco had informed the OERC that Orissa will require a total of 18,726.15 Million Unit (MU) in the year 2009-10. It then informed about the sources from which it intends to procure and meet this requirement. Like the Gridco, other players in the power supply network like the power producers, transmitters and consumer representatives also submitted their design power generation, expenditure burdens and what price they expect etc. Taking everything into account the OERC decides quantity of power to be supplied to Gridco and their rate. It also decides power tariff for consumers and end users. While going through this process for the year 2009-10, the Gridco had submitted its plan to meet Orissa’s power requirement. There is no point for guessing that hydro power being the cheapest among all sources was and is the first choice for Gridco. The Gridco, relying on OHPC sources, had estimated that it will get 6,184.44 MU from OHPC. However parties appearing for the consumers submitted that this was a too conservative estimate and ‘Gridco has merely accepted the data submitted by the OHPC and has not done independent assessment of hydro power availability’. They submitted that ‘the availability of power from state hydro stations would be around 7,680 MU in FY 2009-10 as against the GRIDCO proposal of 6,184 MU’. But the OERC negated consumer’s estimation and instead agreed to the estimates made by Gridco. Though, OERC did not agree to consumer’s assertion that the consumers are losing out on cheapest energy, still 6184 MU from the OHPC in the year 2009-10 was the single most dominant procurement source for Gridco. This allotment constituted about one-third of its total energy procurement target for the year at a very cheap rate of 57.66 paise per unit on an average with power from Machhkund being the cheapest among all hydro power centres at 13.90 paise per unit and Indravati being the costliest at 73.35 paise.
In contrast, other sources - from which Gridco budgeted to procure the remaining two-third of required power - were 3.35 to 5.2 times costlier. The purchase rate – fixed by OERC - from Orissa Power Generation Corporation (OPGC) owned thermal power plants is 193.70 paise per unit; from Central Power Generation Corporation (Primarily NTPC) is 197.31 paise; from central hydro sources like Chukha, Tala and Teesta is 190.30 paise; from Captive Generation Plants (CGPs) in Orissa is 300 paise; and from renewable sources at 269.43 paise per unit. OHPC’s power, being the cheapest and the largest source, was expected to moderate all these costly sources and keep Gridco’s total purchase cost at 2,923.80 crore rupees for 19,619.11 MU of power required for Orissa in the year 2009-10, at 148.27 paise per unit.
So the power sources, per unit cost, units to be made available etc. were all decided by the OERC. Had everything gone as per the plan, Gridco would not have bled losses. But that was not to be. OHPC - the most vital source that moderated Gridco’s total purchasing cost to a reasonable level – faltered in making committed supply to the Gridco. For a period OHPC’s supply almost dried up as if its reservoir beds have gone bare. At the last count, OHPC managed to produce just 4,136.139 MU till 25 March, 2010. With only six days remaining of this financial year, the OHPC is expected to produce another 60 MU. This will take OHPC’s total energy production for the year 2009-10 to about 4,200 MU. This is a mere two-third of what was expected from it. Because of this huge deficit supply from the OHPC, the Gridco was forced to scout for other suppliers to plug the gap. That has undone all calculations and caused severe losses to Gridco. As the other sources from which Gridco gets supply are already stretched, they are in no position to make additional supply to Gridco. Even if they make supply, the cost will be many times more than that of OHPC’s power. Now, Gridco has no other way than to purchase power from wily producers at exorbitant cost. Some privately owned CGPs, with whom the Gridco has purchase agreement, charge OERC fixed rate up to the agreement level. Beyond that... it’s the producer’s fiefdom - to grab profits as much as possible from the Gridco’s misery. The negotiations are held hardly on equal terms. The OERC plays no role there; it does not have any jurisdiction to play either. Naturally, power rates spiral with the summer heat. In such a similar situation, the Gridco purchased power at more than 800 paise per unit last year. The situation is ripe to worsen this year. Gridco has lost substantial units of very low cost energy – hydro power - and is now compensating that loss with very high cost energy.
Smacks of Subterfuge
Low hydro power production cannot be reasoned in any manner
As power situation worsens to new lows, people get bemused by the status of the so called ‘energy capital of the nation’ – that Orissa was flaunting as its USP not long ago. But the government had a ready excuse – that reservoirs have dangerously low water level. That excuse has fooled many people into believing in that. But the reality of reservoir level is starkly the opposite. As the summer was approaching all the major power producing reservoirs were having higher than their normal water level.
With March we entered the summer months. On the first day of March this year, all the major reservoirs had higher water level than what they had on the same day last year. Hirakud, one of the largest reservoirs of Asia, was at 618.73 feet level against last year level of 612.47 feet. Indravati, the largest hydropower producing reservoir of the state, had a level of 635.6 meter against last year’s 632.61 meter. Rengali, Orissa’s second largest reservoir, was at 118.94 meter level on 1 March 2010 against 116.02 meter level that it had on the same day in year 2009. Only Kolab reservoir had a slightly lower water level than what it had on the same day last year. In fact, the water levels maintained by these reservoirs on the 1 March were higher than not just their last year’s level, they surpassed their past five year’s average level too by quite a big margin (See table: On a High...**). In the last five years, excluding this year, Hirakud reservoir had maintained an average water level of 616.63 feet against this year’s level of 618.73 feet. Similarly, Rengali this year was at 390.12 meter level against last five year’s average 383.82 meter. The catchment area of Indravati reservoir received less rainfall this year. But still, Indravati reservoir maintained a higher water level this year than its average level of last five years. Only Balimela reservoir maintained a slightly lower level than its average level in past years. When water levels in the reservoirs are at higher than their normal levels, government’s contrary propaganda is very hard to swallow and is perplexing. May be a cleaver ploy is cooking to benefit wily parties at the cost of the consumers. Clearly, while some are probably smiling at the deceitful act of the government, awed common people are floundering on their ways to brace the shock in the ensuing heat.
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* The writer is a development researcher. He can be contacted at bimalpandia@gmail.com
** Figures in the bracket shows difference in water level compared to 1st March 2010.
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