Shortcut to peril

According to government sources, the state requires about 380 to 400 lakh units of power per day. The demand leaps to 450 lakh units during peak hours. In-house generation is about 100 units a day, and Haryana buys 100 units from the Bhakra Beas Management Board (BBMB) and about 200 more, largely from the National Thermal Power Corporation (NTPC) and National Hydro Power Corporation (NHPC). Occasionally, the state also buys power from Himachal Pradesh, Punjab and Delhi.

Officials say that there is a barter deal with Himachal Pradesh. While Haryanadraws power from the hill state during the monsoon and summer months, it starts returning the power from November 15 each year.

The Haryana Vidyut Pras-aran Nigam (HVPN) runs up a bill of Rs 200 crore every month in buying power, sources point out. Power supplied to the end user costs the state Rs 3 per unit. By simple arithmetic, 400 lakh units each day would imply a cost of Rs 1,200 lakh or Rs 12 crore. With 45 per cent of power being supplied to the farm sector (according to World Bank estimates), it would mean supplying free power worth Rs 5.4 crore every day. That’s nearly Rs 2,000-crore worth of free power annually at current costs.

The HVPN is already unable to pay for the power it buys from other producers. It owes approximately Rs 1,000 crore to various suppliers including the NTPC, NHPC and the Delhi Vidyut Board (DVB). The two major suppliers, NTPC and NHPC, reportedly issued notices to the HVPN last month.The price to be paid is, however, much higher. “Haryana cannot afford to lose the WorldBank at this juncture. In the last mission, the WB team had made it clear that they don’t need Haryana,” says a senior official. “They are offering support only if the state wants it."

The WB had agreed to support the power structure reforms of the Haryana government in 1998. The first loan under the bank’s Adaptable Lending Programme (ALP), worth $60 million (approximately Rs 240 crore) was cleared on January 16 last year. At that time, Senior Energy Specialist Djamal Mostefai had remarked that Haryana had “demonstrated its commitment to initiate these critically needed reforms.” Last month, however, when Mostefai led a mission to Chandigarh to meet government officials, the team is said to have “expressed unhappiness” with the pace of reforms.

Especially, the fact that the tariff for power to the agriculture sector had not been raised to 75 paise so far.

One of the conditions of the loan was to raise the tariff by 15 per cent overall (including 50 per cent for the agriculture sector) by April1, 1999. “If tariffs had been increased by April 1, the process of reducing losses would have started rolling. But for that to happen, the tariff application should have been filed by December 15, 1998. The government is too late,” says an official. Allowing 15 days processing time and three months for public hearings, the new tariff should have been applied from April 1 this year, he adds.

If the tariff had been increased on April 1, 1999, the cost-income gap would have been bridged by 2002. According to plans laid down at the time of initiating reforms, the losses were to be brought down to 10 per cent during the first year. By the next year, power supply operations were expected to break even and the power generation and distribution sector in Haryana was supposed to make a profit of 16 per cent or so. Already, the delay has affected the pace of restructuring the power sector. “But with power being supplied free, Haryana will go the Punjab way,” an official comments.

“As a part of the agreement,it was decided that the agricultural sector would pay at least 50 per cent of the cost of power. Effectively, this means that the farmer would have to pay Rs 1.50 per unit by the end of three years. All other sectors, except agriculture, are paying more than Rs 3 already,” sources say. Sources point out that giving free power to the farmer would mean losing out on the next World Bank loan amounting to $ 250 million (which was due in October this year, had the state fulfilled it’s commitment on reforms).

It is learnt that the World Bank has told state officials that “the reforms should move in a particular direction.” “Though lending is not initially dependent on performance, there is no way a second loan will come through unless the first has been utilised,” sources add.