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Power brake on progress

The power crisis that has gripped large parts of the country has not spared the more developed states south of the Vindhyas.

Written by The Indian Express |
June 28, 2012 1:44:57 am


Pioneer in the Doldrums

Two years ago,Orissa was a power-surplus state with Energy department officials boasting that they could in fact sell power to other states. Not any longer. A pioneer in power sector reforms,Orissa was the first state to privatise its power distribution network. But thanks to zero investment by private distribution companies and a lack of overhauling old power transmission lines and rising transmission and distribution losses,Orissa is now grappling with burgeoning power demand and a huge shortfall.

As Orissa faced one of its cruelest summer this year with temperatures touching 45 degrees Celsius and beyond in several cities,demand for power shot up while supply plummeted. Against an average peak-hour demand of 3,300 megawatt,Orissa is now getting just about 2,600 megawatt of supply from its own generation units,the central grid as well as captive power plants.

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With all its reservoirs about to dry up,the state is getting just about 100 MW from hydro-sources,about 5 per cent of its installed capacity. As a result,the State Load Despatching Centre instructed the four distribution companies (discoms) to decrease their load during the day by resorting to load-shedding until 2 pm. Although the Naveen Patnaik government said there would be unscheduled power cuts,over the last 3-4 months,several cities including Bhubaneswar have been facing 3-4 hour scheduled and unscheduled power cuts a day.

While domestic consumers have been seething in the discomfort,it is the state’s manufacturing sector that is taking a beating. According to Ramesh Mohapatra,president of Utkal Chamber of Commerce and Industries,losses due to power cuts have hit manufacturing industries such as plastic processing and marine food processing that need uninterrupted power.

Mohapatra,who owns Magnum Polymers in Bhubaneswar that manufactures filament yarns,said that his plastic processing machines are the worst hit. “If we stop our machine for more than 15 seconds,then it takes more time to restart the machine. The moment power goes,the plastic in the processing lines is wasted. That affects profitability. Besides,the voltage quality leaves a lot to be desired. A minor fluctuation in voltage can damage the machine. We have no other option than to buy diesel generators which add to production costs,” said Mohapatra.

Prava Ranjan Patnaik,managing director of Falcon Marine Exports,India’s leading seafood exporter,said production costs had gone up by 40 per cent this year. “We had to buy generators this year due to continuous power cuts. Our products are temperature sensitive and a rise in temperature would affect the shelf-life of our products. My seafood processing plant at Chandaka has been the most affected this year,” said Patnaik. Last year,Orissa exported seafood worth Rs 792 crore,but Patnaik fears that the power crisis would have a major bearing on his company’s achievements this year.

Officials say that the state should have added 500-600 MW every year to meet growing demand and its failure to do so means Orissa will face shortages until the end of 2016 while demand is expected to touch 6,330 MW during peak hours in 2016-17. The state has signed 32 agreements with independent power producers to add 8,193 MW to its supply. But these projects are expected to take time and need to be linked to the grid to be distributed. — DEBABRATA MOHANTY


Small & Medium Problem

In India’s most industrialised state, power has become a nightmare for small and medium companies,while the larger units with their own captive power generation capacity are managing to avoid production losses.

“Power cuts have started affecting the operations of small and medium units. Small units will find it difficult to survive if there’s a production loss. But if the crisis escalates,then big units will also be in trouble,” said Venugopal Dhoot,chairman,Videocon group. “Units in the Vidarbha region are the worst hit. They are facing working capital issues,workers payment and the capacity to survive. If this continues,many of them will down shutters.”

Maharashtra’s main industrial belts are Thane-Belapur,Pune,Nashik,Aurangabad,Nagpur and Ahmednagar and Sushil Jiwarajka,chairman,Ficci Western Regional Council,said power cuts have increased in many of these regions. “Even my unit in Sinnar near Nashik is no exception. You can’t stay in business if you’re unable to produce. You can’t run the industry if there’s power cut for several hours in a day,” he said.

Industrialists and analysts said the power crisis was waiting to happen as the state seemed to not have anticipated demand. Rahul Prithiani,Director,CRISIL Research,blames the poor financial health of the state governments’ power distribution companies for the problems in the power sector. For 2011-12,CRISIL Research estimates state distribution companies on an average were losing close to 47 paise per unit of power sold. “Unless discoms operate on an economically viable model without any loss on sale of power and receive assistance from the government to improve their financial position,there could be continued power cuts,” Prithiani said. — GEORGE MATHEW


Politics & Inefficiency

Andhra Pradesh’s power woes started with the Telangana agitation when a strike at Singareni Collieries hurt coal supply and reduced power generation. The state is yet to recover from that blow. Due to the shortage of power,the industrial sector has been facing weekly power holidays since November,first due to the power crisis as a result of the Singareni Collieries strike and then due to increasing power demand.

Federation of AP Chamber of Commerce and Industry (FAPCCI) President,Devendar Surana says industries have become sick due to the continuous crisis and there is no expansion in the sector either. Losses are estimated at a staggering Rs 800 crore per day.

Faced with two days of no power in a week,many industries are appealing to the state discoms to go for nine days of continuous power cuts instead of two days in a week so that they can reduce operational costs. While production losses are inevitable,industries such as steel,chemicals and pharmaceuticals need uninterrupted supply to avoid damage to raw materials.

“Currently,the industrial sector is facing two days’ power holiday along with 4-hour cuts during peak hours on the remaining five days. If we take into account the 4-hour cuts,it comes to three days of total cuts,” said V. Hanumantha Rao,president of the Federation of Andhra Pradesh Small,Medium and Micro Enterprises.

The crisis is blamed on what captains of industry in the state say is the mismanagement of APTRANSCO. They say the transmission firm failed to tie-up supplies in advance despite a power shortage being clearly anticipated. About six months back,the state government came up with a scheme called the Expensive Power Purchase Charge (EPPC) which aimed to bail out industries by buying power at any cost. However,the plan has not made any progress even though about 35 companies showed interest in buying 125 MW even without an idea of the pricing.— JANYALA SRINIVAS


Greed Without Vision

The soaring mismatch between the demand for power and supply in Tamil Nadu,matched only by the soaring temperatures,sparked such a serious crisis in the state that it had to considerably raise power tariffs and also impose scheduled power cuts of two hours in Chennai and four hours in the rest of the state. Industries and commercial consumers were hit harder,with a 40 percent cut.

The shortage,officials said,has its roots in the state government’s zest to compete with Gujarat,Maharashtra and Andhra Pradesh to attract big ticket investment while not giving enough thought to providing infrastructure to support the investors.

“Many big industrial units and MNCs set up shop in the state,charmed by the facilities that Tamil Nadu had. But unfortunately,there has not been any substantial investments in increasing the power generation capacity,the effects of which were soon reflected on production levels. It is us,the small and micro units who were hit the first,and the hardest,” said J James,Coimbatore district president of Tamil Nadu Association of Cottage and Micro Enterprises Association.

Tamil Nadu has a installed capacity to produce 17,936 MW of electricty,including 6,696 MW of wind power. However,about 8,500 MW is produced on an average while demand is 11,500 to 12,500 MW. Officials say such a huge deficit cannot be bridged through short-term measures and with the government wary of angering household consumers,industries have had to bear the brunt over the last three years.

James said that behind Tamil Nadu’s emergence as a automobile hub are thousands of small firms that manufacture components. As the power crisis worsened,the state government prodded some firms to produce their own power through diesel generators. However,this was not an option for small firms as the price is three to four times higher. “Our production has gone down to 30-40 per cent of what it was earlier. The worker strength in my own firm has gone down from 30 to merely 5,” said James.

The state’s prominent textile sector has also taken the brunt of the power shortage. “Unlike other industries,it is not just availability of power that is important for the textile sector but also uninterrupted supply of quality power. A power failure lasting even half a minute leads to huge wastage and losses in the garment industry,be it weaving,dyeing or spinning,” said K Selvaraju,secretary-general,Southern India Mills’ Association.— GOPU MOHAN


Saved by Slowdown

In 2011,the Bangalore Electricity Supply Company (BESCOM) sent out a circular to industry bodies outlining a roster of days on which they had to declare a holiday in order to overcome power shortages by staggering demand from industries.

For the Peenya Industrial Area,which has a mix of over 6000 small and medium industries of all kinds and is one of the largest industrial zones in Bangalore,BESCOM directed that industries should be closed on Mondays. In other areas it was on other days of the week. However,over the last couple of months,the power holidays have been withdrawn and power supply is more or less on stream through the day excepting for the odd shutdowns for maintenance work.

Peenya’s industrialists say that what has changed between October and now is not an improvement in power supply but rather a reduction in industrial output due to low demand and the slowing economy in general.

“At present,there is no power crisis. We need to see the situation against the monsoon since the installed capacity is predominantly hydro. We need to see if the reservoirs are full in August. If they are dry then there will be a crisis and there will be need for efficient management of the thermal power systems,’’ said S Chandrashekhar,a former president of CII’s Karnataka unit.

— JOHNSON T A (Concluded)

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