Meghalaya power sector: a leaking bucket
Electricity is a blessing of science and an indispensable part of our daily life. As the economy falters under the impact of Covid-19, the availability of reliable power supply becomes all the more important to spur economic development. Today, as education has moved online and working from home is the new normal uninterrupted power supply has become more important and imperative for social development and progress. In such a situation, the recent 11-hour power cuts and the lingering uncertainty about the power supply constitute an unprecedented crisis that has hit the state. While it is clear to all that state governments over the past two decades are responsible for not addressing the deteriorating operational and financial performance of the power sector in time, allegations of corruption in energy projects such as that the Asian Development Bank (ADB) funded smart meter project and Saubhagya Scheme, among others, in the midst of the current electricity crisis, has naturally aroused outrage and indignation from the public and even partners in the coalition of the current government.
The Meghalaya has a hydropower potential of 3,000 megawatts (MW) while the current state-owned hydropower plants generate only about 12% of this potential. Meghalaya’s peak electricity demand at 400 MW has almost doubled over the past 16 years for which it increases based on electricity purchased from hydroelectric and thermal power plants. Meghalaya was once a surplus of electricity with the sale of electricity by the then unbundled electric utility (MeSEB) in 1997-98 at 234 million units (MU) against an electricity purchase of 78 MU. The state benefited from low electricity tariffs and the load shedding was an exceptional event which, moreover, was a regular experience in the rest of the country. Since then, the situation has slowly deteriorated, with the state having to endure long hours of blackouts and load shedding while the energy situation in the rest of the country has comparatively improved. So what has happened over the past two decades that has led to this unenviable situation?
First, we find that there has been an exponential growth in energy sales to industries, especially energy-intensive industries, after the implementation of the Northeast Special Industrial Policy in 1997-98. These energy sales to high-voltage and extra-high voltage industries, which accounted for about eight percent of total energy sales in 1997-98, peaked at 50 percent in 2008-09 and are today reduced to 35 percent of total energy sales. The slow increase in installed capacity by the state-owned power generation company (MePGCL) as well as the sharp increase in demand from industries and domestic consumers (demand from this segment has been steadily increasing due to population growth and rural electrification programs) have forced the state to increasingly rely on expensive electricity from power plants, especially during non-rainy seasons and years with insufficient rainfall . In 2017-2018, almost two-thirds of electricity purchases by the public electricity distribution company (MePDCL) came from the three power plants.
Worsening this mismatch between electricity demand and the ability to meet it from power generation by MePGCL are the high aggregate transmission and marketing (AT&C) losses which, at 35 percent, are among the highest in the country and well above the national average of 22 percent. hundred. Lack of funds to modernize existing transmission and distribution networks has delayed the avoidable reduction in network losses. In addition, high business losses caused by human factors such as electricity theft, meter reading errors, faulty meters, and lack of billing discipline have compounded the financial problems of electric utilities. of State.
The CMD’s recent statement from a state-owned electricity holding company (MeECL) that industries are involved in the theft of electricity and the subsequent counter-allegation by Company employees that the CMD allegedly granted an undue favor to lowering the penalties imposed on an industrial unit engaged in electricity thefts are likely indicative of a long-standing financial scam causing rupee crore losses to the country’s electricity sector. State. Energy-intensive industries with only around 130 consumers out of around 4.75 lakh are both a boon and a bane to the state. This tiny consumer consumes almost 35-40% of electricity and pays the highest electricity rates among all categories of consumers. However, the uncontrolled theft of electricity by this segment is also detrimental to the financial health of the electricity sector.
While AT & C’s average losses are high, the situation in some income circles like central, eastern and western Garo is alarming and has been for a long time. The high business losses in these circles are attributed to a high incidence of electricity theft, unmetered connection, faulty meters and average billing due to the existence of faulty meters. This is another area where efforts to improve revenue collection through billing and collection discipline often meet political interference and consumer resistance. low voltage ratio which also contributes to high distribution loss and poor power quality of consumers.
The above-mentioned factors have altered the financial position of MePDCL, manifested by the widening gap between average procurement costs and average earned income (Rs. 1.17 in 2018-19), indicating that the generated income by energy sales are insufficient to even cover the cost of purchasing electricity, let alone other operating expenses. This has led to the accumulation of unpaid contributions as well as penalties and additional charges owed to the central electric utilities, placing the state in a pitiful position where the assurance of the settlement of unpaid contributions given by the government state is not sufficient to appease central public services – a big credibility problem for state government.
Meghalaya’s electric utilities are plagued by numerous operational and financial inefficiencies that have persisted for many years and measures to address the issues require increased production (including from renewables), management supply (ensuring the production, transmission and distribution of energy are carried out efficiently) and demand management (modifying the customer’s electricity use pattern to enable efficient use of energy and load management). However, the state of the power sector in the state goes beyond technical factors. The problem of corruption in electricity projects, theft of electricity by industries, lack of political, administrative and community support for severe action against the electricity supply are equally important factors contributing to the current payment and credibility crisis in the electricity sector. Unless these leaks are plugged, more loans and higher tariffs will fail to save our electric utilities from the financial quagmire in which they find themselves.
For the current government, the situation is undoubtedly very difficult and the allegations of corruption within the ministry which collapse one after the other seriously damage the image of the government. However, if the government succeeds in reviving the ailing electricity sector, it would be a singular achievement that will restore its credibility with the state’s citizens, boost the confidence of investors and financial institutions, and reap rich dividends in the years. next elections.
The writer teaches at NEHU: Email [email protected]