Darkness at noon

Chronic mismanagement of power supply in Goa has ensured that his Rs 7-crore unit runs for just 16 days a month with voltage fluctuations stalling plant and machinery several times an hour. However, what really rankles Agarwal is the heaps of abuse showered on him and other steel and ferrous goods manufacturers for guzzling power8217; and creating a shortage.

8220;The State Government paints a rosy picture of cheap power and infrastructure to lure us to Goa and then withdraws the incentives,8221; he says. Agarwal says he set up his unit in the state in order to avail of cheap power priced at Rs 2 per unit with an additional 25-per cent rebate on it apart from thefive-year tax holiday granted by the Central Government in 1992-93.

Shortly thereafter, electricity charges were hiked to Rs 3.50 per unit and the 25-per cent rebate was withdrawn following stiff resistance from Opposition parties. Despite his factory lying idle for 14 days every month, Agarwal claims he has to shell out Rs 4.75 lakh to the Power Department as minimum demand charges and another Rs 8.5 lakh to the Excise Department as fixed charges, thereby pushing his unit into the red. 8220;The depreciation on our plant and machinery is higher than our income,8221; he says.

Even as Agarwal plans to close down his unit by end-August, his plight has received precious little support from industrialists in Goa. 8220;These steel and ferrous units, numbering 37, are mostly owned by fly-by-night operators who go wherever there is cheap power,8221; says an office-bearer of a trade association. Even the Goa Chamber of Commerce and Industry concurs with him. 8220;These power-guzzlers employ obsolete technology which rely oncheap electricity,8221; says Kabir Gama Roy, chairperson of the chamber8217;s Committee on Infrastructure.

According to Power Minister Mauvin Godinho, 13 power-guzzlers8217; collectively have defaulted on power bills amounting to more than Rs 10 crore.

Goa, which is entirely dependent on neighbouring Maharashtra and Karnataka for its power, is eligible for 394 megawatts MW of power annually.

However, an obsolete transmission and distribution Tamp;D system ensures that the state is able to access only 180-200 MW annually. The rest of Goa8217;s power is utilised by Maharashtra and Karnataka themselves.

Despite this, power-guzzlers8217; were allowed to set up shop without restraint as a result of which demand for power in the state is in the region of 400 MW per year.

The Bombay High Court, following a public interest litigation PIL has ordered the state8217;s Electricity Department it does not have an electricity board to stop providing new power connections except to domestic consumers. Though the court order hasprevented the state8217;s slide into total chaos, all fresh investment in Goa has come to a halt.

This is the biggest blow for the industrial climate in the State since the Thapar-Dupont Nylon 66 project was evicted from Goa in the early 8217;90s, observers say. 8220;Following this order, no industries will be able to come to Goa,8221; Industries Minister Luisinho Faleiro admitted in the state Legislative Assembly.

The five-year tax holiday enjoyed by the State till the end of the century is therefore likely to prove ineffective. Since 1993-94, when the tax-holiday was first introduced, investments in Goa8217;s small, medium and large-scale industries amounted to an average Rs 60-65 crore annually. 8220;The term tax-holiday is misleading. We should be telling people we don8217;t have enough power now,8221; says entrepreneur Parag Joshi, one of the co-petitioners in the PIL.

The Government admits that there are no solutions to the problem in the short term. It expects substantial power to flow into Goa by the year 2000, when theKoyna power plant in Maharashtra is upgraded. Simultaneously, the commissioning of Enron8217;s Dabhol power plant and Reliance8217;s Patalganga plant will alleviate the situation in the State. However, the Power Department has expressed its inability to invest Rs 60-70 crore to upgrade the state8217;s transmission and distribution Tamp;D network.

Goa is now relying on private power generation to meet the demand. A 48-MW power project by Reliance-Salgaocar is scheduled to go on stream by end-August. While 40 MW will be bought by the Government, the rest will be sold directly to private parties. And, with a capacity to increase output to 100 MW, Reliance-Salgaocar is expected to become a major power producer in Goa.

The company also proposed to install Tamp;D facilities across the state. The proposal is pending with the State Government, which is awaiting the passage of the Power Regulatory Bill in Parliament.

Incidentally, the International Finance Corporation has recommended setting up a single, autonomous corporationto handle Tamp;D of power rather than depending on multiple operators. This move would enable the corporation to garner sufficient resources to upgrade the existing network, it is felt.

Currently, transmission losses account for 26 per cent of the power supplied, according to a white paper prepared by the state Power Department. This is the highest in India after the North-Eastern states.

The privatisation of power has, however, been received with mixed reactions here. Though everyone agrees that the quality of power availability will improve dramatically, apprehensions have been aroused over the cost of power.

For instance, power from the Reliance-Salgaocar project will be priced at around Rs 4 per unit which, industrialists say, is clearly unaffordable to players operating on wafer-thin margins. 8220;We shall never be able to run our units at this rate,8221; says Agarwal, who is former president, Cuncolim Industries Association, which represents the power guzzlers8217;.

A similar warning has been sounded byKabir Gama Ray of the Goa Chamber of Commerce and Industry. 8220;Most of the small units in Goa will die if power is priced high,8221; he says.

Gama Ray notes that 4,500 of the 5,000 small-scale units in the state have a capital of less than Rs 2 lakh. Any closure of these units, which employ nearly 35,000 persons, would create a major socio-economic crisis in the State, he feels.