Punishing power cuts

Everyone can understand the broad logic of the National Thermal Power Corporation NTPC stopping supplies to states which do not pay the...

Everyone can understand the broad logic of the National Thermal Power Corporation NTPC stopping supplies to states which do not pay their bills. It is commerce plain and simple: no payment, no goods and services. The reality is much more complicated. For political and commercial reasons the NTPC does not have the option of withholding supplies from State Electricity Boards for any length of time.

This is because the NTPC must avoid both a political uproar and inflicting more losses on itself in a situation where it has no major customers other than feckless SEBs. Threatening to cut off power or actually doing so for a short duration is intended to make a point and produce results not in full measure but in part and enough, in any case, to ease the cash flow at NTPC temporarily. Without this arm-twisting SEBs who owe the NTPC a whopping Rs 8,538 crore, would continue to take the line of least resistance neither paying their dues nor troubling to find the wherewithal to do so eventually.

What is moredifficult to figure out is the point at which the NTPC thinks it fit to resort to penal measures. What triggers off a power cut, a particular quantum of arrears, failure to arrive at a payment schedule with an SEB, broken promises, the passing of a deadline? Or do periodic cuts in power supplies amount to no more than a loud and involuntary squeal of pain from the NTPC? These questions arise because the latest goings-on in the eastern grid do not conform to any particular logic at all.

Without getting some of the Rs 2,454 crore owed by the Bihar and West Bengal boards and the Damodar Valley Corporation until the end of September, it is said, the NTPC would be seriously strapped for cash and unable to run the Farakka, Kahalgaon and Talcher stations for much longer. In the event, Bihar complaining loudly, agreed to pay a tiny fraction Rs 50 crore of the Rs 1,369 crore it owes and Kahalgaon was kept going. Orissa was spared too with Talcher continuing to operate. West Bengal which owes Rs 716 crore has notbeen so lucky.

Farakka has been shut down and the state also loses its share of power from Kahalgaon. The WBSEB may be able to ride out this crisis by improving power generation at its own plants and putting the squeeze on the Calcutta Electric Supply Corporation. It is a moot point whether these steps will help resolve the WSEB8217;s conflict with the NTPC.

The criteria for switching power on and off in the east of the country are no more bizarre than those applied elsewhere. Were the quantum of arrears the deciding factor, two other states would come in ahead of Bihar for punishment. One of two absurd reasons would explain why Delhi with Rs 1,710 crore in arrears and UP with Rs 1,775 crore are not lined up for action.

One would be political. The other would be that it takes a much higher level of arrears to trigger off a crisis in plants serving the northern grid. All said and done, the NTPC8217;s use of its weapon of last resort is necessary. There do not seem to be many other ways of disciplining SEBs. Butfor such penalties to be effective, the criteria and objectives should be clear and the measures should be consistently applied.