Maharashtra chief minister Prithviraj Chavan's announcement that state will be load shedding free from January 2013 onwards comes with a rider.
It cannot afford anymore to overrely on power purchases from the state undertakings MahaGenco, NTPC and Ratnagiri Gas & Power Pvt Ltd (RGPPL) but will have to buy even more quantity of power from private producers, power exchanges and traders at competitive rates.
Besides, the chief minister has also dropped a sufficient hint that loss making regions, those having distribution losses of more than 50%, would have to pay more to avoid load shedding. At the same time, the consumers by and large would have to share fuel adjustment cost as the state-run Maharashtra State Electricity Distribution Company (MahaVitaran) won't be in a position to bear all additional power purchase costs alone.
MahaVitaran official told Business Standard "As of now the state is meeting 12,500 MW of demand against the total requirement of 13,000 MW. The load shedding is carried out especially in the high loss making areas. Demand for power is growing at 8% annually. At present, MahaViataran draws power from RGPPL (erstwhile Dabhol project) at Rs 5.81 per unit, from MahaGenco's new units above Rs 4 per unit and NTPC's new units Rs 4.15 per unit.
However, in the market the round the clock power is available between Rs 3.80 and Rs 4.05 per unit." The official informed that Maharashtra used to meet its 95% of power requirement from MahaGenco and NTPC about seven years ago but it has now come down to 60-65%. Nearly 40% power now is drawn from private producers due to the huge capacity added by them in last few years.
The official said at present the state has about 700-900 MW of surplus power during 6 pm and 6 am. "Therefore, MahaVitaran has made plea with the state regulator to provide the excess power to industries during night with a rebate of Rs 2.50 per unit from the present level of re 1 per unit," he added. According to the official, the MahaVitaran has floated tender for the purchase of 300 MW during day time between November 21 and January 31, 2013.
Jayant Deo, former member, Maharashtra Electricity Regulatory Commission said the state needs to do power purchases at increasingly competitive rates. "The competition has set in the power sector due to power exchanges. This fact needs to be noted by states like Maharashtra. By not accepting this fact, the state is not following merit order purchases and continue to draw expensive power from state units even though cheaper power is available on the power exchanges and with private generators. If Maharashtra really wants to get rid of load shedding, state must embrace competition directly for 1 MW and above consumers and also buy power as required from private generators and power exchanges at competitive rates.
D Radhakrishna, power analyst opined that there was no doubt that Distribution Companies should buy cheaper power and that was possible only when power procurement is done on a proper planning on Long Term and Mid Term instead of resorting short term power. "However, today we have some Power Generating units operating on Captive Mining and Long Term Coal Linkages and these power plants can be roped in for selling cheaper power as cost of coal to them is Rs700 for 4500 GCV (gross calorific value) as against imported coal and coal purchased from open market costing Rs 3500 per ton for the same quality of coal," he added.