Power surplus Punjab fails to consume power

Power surplus Punjab fails to consume power
Punjab, a power surplus state , joined the UDAY ( Ujwal Discom Assurance Yojana) third revival package introduced for the power distribution sector in India to revive the Punjab State Power Corporation Limited (PSPCL) from a possible debt trap as the state failed to consume the power within state or sell it to power deficit states leading to forced closure of public sector thermal plant units.
State governments willing to join the UDAY scheme has to take over 75% the debt of power utility two years 50% this year and 25% in the next year . The balance 25 % will be borne by state electricity boards. Under the scheme, by transferring three-fourth of PSPCL debt to state government , the debt will not be counted to calculate states’ fiscal deficit or their borrowing limits, but states actual deficit will double to 6% or more..
In PSPCL billing efficiency is around 83%,revenue collection efficiency of 99% and AT&C losses are in range of 18%.In case Punjab is able to bring down AT&C losses to 10% by 2018-19 the saving would be around Rs. 2500 crore. The plan also includes steps to reduce power theft, collect payments more efficiently and raise tariff every quarter in line with production cost.
In case PSPCL adhere to the performance milestones to be developed and incorporated in the agreement with the centre and state, the scheme could be a success. The solution to the PSPCL’s problem is technically obvious, but politically challenging. The ruling party in a state has agreed to the terms and conditions of the bailout plan , but this might be difficult to implement practically in the absence of political will. For a politician, votes are more important than reforms and state governments.
The financial position of PSPCL can be improved only if there is zero difference between per unit revenue received and cost of overall per unit supply. The performance of the power sector in Punjab is one of the most critical components of infrastructure and is indispensable for economic growth of the state.

The thermal plants of Punjab used to be a matter of pride for the PSPCL as they won numerous national awards for their outstanding performance and now these are struggling for their survival as their units have been put on forced shut down to pave the way for power purchase from private sector thermal plants .

The Punjab power generation policy was announced by the government in June 2010 to facilitate accelerated addition of power generation capacity to meet the increasing electricity demand and higher growth rate. It was decided to two new thermal plants 1980 MW Talwandi Sabo and 1320 MW Rajpura thermal in private sector and a large number of incentives were extended to private parties.

It is a matter of debate what went wrong with the power generation policy whose aim was to transform the state from power deficit to power surplus state by encouraging private developers for setting up power plants and to supply power at affordable rates. The power generation policy has failed to bring down cost of power and led to forced closure of thermal units of state sector thermal plants as power is surplus in the state. Consumers will have to bear the brunt of fixed charges of private sector thermal plants for not fully utilizing their available power as per power purchase agreements.

The downfall of state run thermal plants started with the commissioning of two thermal plants units in the state by the private sector . Though with the coming up of new plants has made Punjab a power surplus state but tragedy is that Punjab is neither able to consume surplus power within state nor sell the power to other deficient states.

PSPCL is supposed to purchase power even by keeping its own plants idle or pay compensation of Rs 2,700 crore every year to private thermal plants as fixed charges even without purchasing a single unit. The reduction of public sector power generation to about 9,500 million units in 2015-16 as compared to 16,500 million units in 2012-13.

This may be mentioned that Lehra Mohabbat thermal plant generated an ever highest 76,21MU with a plant load factor of 94.31 per cent during 2011-12 was the highest among all state sector power plants of the country. Similarly Ropar thermal plant generated record 9717 MU in the year 2011-12.
The plant load factor of thermal plants at Lehra Mohabatt and Ropar used to hover around 90% and above has come down so much that the thermal employees are often denied monthly generation incentive. The plant load factor of Ropar and Lehra Mohabatt thermal plants in the state for the current financial year up to period ending November has come down to 45.13% and 47.77% respectively .PSPCL ,however , has projected these figures as 55.65% and 56.61% in the ARRR for 2016-17, the figures may not be achieved
The total generation of 1400 MW Rajpura thermal plant in the current financial year up to ending November is 4990.8 MU with plant load factor of 60.88 % against last year’s generation of 4153.9 MU. Similarly 660 MW Talwandi Sabo thermal unit for the period of March to November is 1744 MU against last year generation of 461 MU during corresponding year.
PSPCL’s own generation has decreased drastically even against its own assessment in ARR submitted to PSERC last year which means PSPCL has now become a junior partner in generation of power in with the commissioning of upcoming power stations in the State.
The cost of power procured is more than cost of generation at PSPCL’s own thermal plants. Average variable cost for all tree thermal plants in state is Rs 2.63 per unit .with Lehra Mohabatt thermal plant having the least generation cost of Rs 2.36 per unit.
PSPCL has calculated the variable cost considering the variable charges as Rs. 2,60 per unit for Rajpura TPS and Rs. 2.22 per unit for Talwandi Sabo TPS (TSPL) The fixed cost for the Rajpura TPS and Talwandi Sabo TPS has been calculated by PSPCL based on the fixed charges as Rs. 1.36. per unit and Rs.1.35 per unit respectively The per unit supply cost from private sector plants increases after adding the fixed charges payable for not utilizing the generation as per power purchase agreement..
Despite power surplus , the over dependence on private sector for power generation in Punjab is neither good for the grid security nor for the general consumers .
Further there has been abnormal delays in the appointment of PSPCL CMD and Directors and Member of PSERC. One Member PSERC retired on 05 Dec 2014 , but Punjab Government has failed to appoint new member. Three members selection Committee postponed meeting twice Due to this dithering the PSERC is working with 2 Members as against required 3 for the last one year. The term of present Chairperson ends on 5 Feb 2016 and the term of second Member ends on 12 Feb 2016.
Revival of electricity distribution companies holds the key to bring back the power sector back on track and to ensure optimum utilisation of the installed capacities of electricity generators particularly thermal projects


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