The write up presents a bird’s eye view of the power budget and does not go into the details. Though there are important issues which need threadbare discussion and debate, this write up only aims to give the reader an idea about what was presented with a little commentary only about the most pressing issues.
In a “Landmark initiative” by the new government the power budget for 2015-2016 was presented separately from the general budget. As per the finance minister this was done for three reasons. “First, sustainable development of energy resources coupled with reforms in the power sector in a definite time frame. Second, supply of 24×7 quality, reliable and affordable power to all Domestic, Commercial and Industrial consumers. Third, containment of our fiscal deficit and unleashing of a new era of development”. The intent seems to be good but the execution should match the intent and for that the roadmap needs to be pragmatic.
The budget talks about power sector in terms of Generation, Transmission, distribution and reforms. Let’s look at what is offered in each sector.
For development of hydro power projects the budget envisages making J&K power development corporation (JKPDC), a public company which means that it shall be listed in the market. This shall bring more money and strengthen the corporation. The budget also talks about developing 7500 MW of solar power in Ladakh. Since the electricity produced from solar sources is costly, the budget envisages that this power shall be bundled with cheap hydro and thermal power. The mechanism is already in work in many states and as per recommendations of the central electricity regulatory commission it has to be done. Again the budget talks about a joint venture thermal power project which it wrongly states is in Madhya Pradesh whereas it is actually located in Odisha. The budget only states that preliminary work would be carried out regarding this project which giving any more details. It needs a detailed analysis to conclude whether this project would be fruitful for J&K or would be like many other stations in India which lie idle and are making huge losses since their electricity costs are high. I shall try to delve deep into this in a separate write up.
The state currently has 761.96 MW of aggregate capacity in state sector from all Hydro sources which are being used to meet local demand. The budget doesn’t talk about whether this entire power is made available to the state or some part is sold as well to other states to generate revenue. The budget states that J&K shall have a peak load of 4217 MW in 2021-22 and the PDC has made a roadmap for meeting this requirement. The envisaged 6263 MW which will be generated via 15 projects shall need an investment of 60,000 Crore. The big question remains how will the state manage even 18000 Crore based on 70:30 debt equity ratio when it is already faces severe financial crunch and no major boost to revenue creation is seen in foreseeable future.
The budget figures clearly point out that the central sector-read NHPC- has made huge headways in the generation sector whereas the state has not been able to match the pace and has been a laggard all through over the past many years. Again the budget states that the state government shall seek to enhance the free power from central utilities from the current 12% but this seems to be difficult as it deviates from the recommendations of the CERC which central utilities follow religiously and the central government is unlikely to agree to J&K’s demand for additional free power. Therefore, the additional free power statement seems nothing more than a rhetoric.
The budget also talks about the coal block allocation in Odisha which shall feed the proposed 660MW supercritical thermal power project in Odisha. It argues that it shall be profitable to locate the plant in Odisha vis-à-vis J&K. However, many experts argue that it is wise to buy power from generating stations in northern grid rather than Odisha as the power from Odisha plant shall prove to be very costly compared to what is available in northern grid. Experts estimate that the cost per unit of the Odisha project shall be Rs 5/unit whereas we can buy power at cheaper rates from the northern grid. The location of the plant in a different grid shall again come with transmission hassles as inter-regional transmission capabilities are limited.
Transmission, Distribution and Reforms
The budget states that “the infrastructure available to meet the transmission of estimated demand at the end of 12th plan is not adequate enough in the State”. The budget rightly points out that in the wake of thrust on generation of more power in the State by undertaking the fresh projects, the transmission systems need to be made capable of handling the evacuation of power to the distribution utility. There will be a gap of 1430 MVA at 220/132 KV level, a gap of 2029 MVA at 132/66-33kV, a gap of 2539.70MVA at 66-33/11kV and a gap of 3094.36 MVA at 11-6.6/0.4kV at the end of 12th plan in the transmission capability which needs to be met.
About 9000 MW of capacity addition is under execution in the state out of which around 2100 MW is scheduled to come up by the end of 12th five year plan. The state would have to gear up for evacuation of this power which would need 2500 Crore. Additional transmission lines would be required for evacuation of power from Ladakh from the proposed solar and hydro projects which are due to come up in the region and would require another 10,000 crore. Besides this the vision for “power for all” by 2017 would need an additional investment of 4054 crore. Thus the overall investment in transmission sector is pegged at 16554 (2500 + 10000 + 4054) crore.
The budget clearly points out to a major concern that “the reliability of power supply to Kashmir valley is also a major concern since the power supply is through 220kV & 400kV transmission lines which are passing through same corridor which is highly prone to snow and wind storms”.
The budget also talks about other reforms out of which un-bundling of the department is a big ticket reform. Many people have not appreciated it and a few sections of civil society have opposed it but for improving the health of the department, unbundling is very important as is evident from many examples in other states which have reaped rich benefits after unbundling the power department. The budget also talks about improving the existing HT/LT systems and envisages replacing the rotten poles in high risk areas on priority basis. To solve the problem of transformers getting burnt or other problems in transformers the budget proposes to provide Transformer Bank Funds for strengthening of Transformer Banks. It also talks about setting up of modern workshops and meter testing facilities.
The budget reads that the energy deficit in the state is of the order of 27% and peak power deficit is of the order of 23% which implies that there is energy curtailment of the order of 8 hours in the state, which is source of concern given the harsh climatic conditions in the state. The budget envisages various information technology measures like optic fiber connectivity, electronic billing systems and others which would increase the reliability of supply and all these steps are important and need urgent attention on the ground.
The budget also points out to the losses and states that “against registered load of 2500 MU in the state, the demand at 0.5 load demand factor should not exceed 1250 MW. But the consumers use unauthorized load due to which unrestricted demand is as high as 2600 MW which indicate that actual registered load should be 5200 MW”. However, the budget does not project the future demand based on this trend.
As per the experts in the sector the ailing nature of power sector in J&K is mainly because of the inefficient and incapable manpower. People in J&K know very well about the competencies of the personnel in the department. The drawal of power from the grid against the agreed upon schedule which often leads to heavy penalties which the state has to pay is a glaring example of the incompetence of the department. The budget tries to bridge the gap by proposing to set up Chenab Power Management and Training Institute.
The budget also points out to the illegal consumers drawing power which need to be identified, booked and brought under registered consumer category. It states that “as per Census 2010-11, the number of households in the State were 20,15,088 and 17,53,201 households avail electricity. However, 15,72,815 consumers are registered with the PDD ending 2013-14”.
The budget acknowledges that though the per capita electricity consumption in J&K is at par with national average, there is a need to improve it given the harsh climatic conditions in J&K. It’s pertinent to mention that the per capita consumption of electricity in India is very less compared to China and USA and needs to be raised for better standard of living.
As per the budget document, “the Finance department has kept a revenue target of 3508.62 crore for current financial year 2014-15, but actual recovery on account of electricity tariff (including ED) ending February, 2015 is only 1527.67 crore” which indicates that the revenue realization in J&K is very poor. The average cost of power purchase this year up to January, 2015 is Rs 3.78 per kWh (unit). The Department has purchased energy up to January 2015, worth Rs 466.83 crore and Rs 4315.53 crore from JKSPDC and from non-J&K State Generating Companies.
The actual power purchase liability of department is Rs 6266.13 crore. In a single line the budget states that UI/deviation charges are Rs 512.45 crore. The figure should sound alarming as it is only due to the mismanagement of the grid by the grid engineers/operators of the state for which the money has to be paid by the common man. Where hundreds of crores could have been saved, there the state shelves out more than 500 crore as deviation charges. The issue needs to be addressed and the responsible persons need to be held accountable for this colossal loss if power sector is to see some light after years of darkness.
The budget also states that “The non camp temporary installations of Security Forces have been consuming electricity without registered connections. The energy thus consumed by the Security forces goes un-accounted and un-paid”. While the common people of J&K have to pay for their own energy consumption and grid mismanagement by the inefficient staff, the security personnel are enjoying the sweet pie without paying anything. The budget also states that “No realization is made on energy consumed by the Migrant Camps”. One fails to understand that why these settlements are not billed and free electricity is provided to them. Do they serve as vote banks or are there instructions from superior bosses to give them free electricity is a question that the government needs to answer.
(Hakim Iqbal Abdulla is an alumnus of NIT Srinagar and is a power engineer with NTPC based in Surat, Gujarat. The views expressed are his own and do not reflect the views of the organisation he works for. The author can be contacted at firstname.lastname@example.org)