Maharashtra's power struggles may not end soon

The coal shortage faced by electricity producers across the country has impacted the state-owned generation and distribution companies. As a result, the state is enforcing emergency power cuts in regions where the monthly bill recovery is low and distribution losses high. However, this has led to internal strife between both companies - Mahagenco and Mahavitaran.

Mahagenco, the state electricity generation firm, says it should not be blamed for the mess, as it has been performing maximum despite fuel shortage and financial constraints, even while the state distribution utility Mahavitaran has not paid it regularly, and failed in planning gross power procurement in the wake of increased demand. According to Mahavitaran, it faces an average deficit of 4,700MW. Mahavitaran has blamed its financial woes on dues to be recovered from the government and other entities.

At 3.30 pm on Friday, the state company's scheduled demand was 22,773 megawatts, but it increased to 24,130MW (catered). According to Mahavitaran, there was load shedding of 600-700 MW in the morning in the selected areas, but no cuts in the rest of the day. The outages were avoided by buying additional power from CGPL (Tata), Gujarat (760MW) and NTPC (673MW till June 15).

Mahavitaran says it faces an average daily deficit of 4,700MW. File pic

Around the same time, Mumbai's demand was about 3,000 MW, but the capital's three private companies and Mahavitaran, which caters to the eastern suburbs, did not force power cuts. Mumbai is unlikely to face any eventuality, unless for an emergency breakdown like the past.

No relief for the rest of state

The electricity demand and supply situation in the state-owned licensed area is unlikely to recover any time soon, said independent power expert Ashok Pendse. He said the jump in demand is attributed to the increased consumption due to the rising mercury. "There have been instances of the state having registered higher demand than this, but now there are a number of factors that are impacting the generation and distribution," he told mid-day, adding that the immediate solution was a drop in the rising temperature.

With the month of May expected to be even hotter, the planners in the state company are scrambling to make arrangements to procure more power from outside. Mahavitaran said on Friday that Mahagenco has been supplying much less than contracted supply of 9,540MW and the National Thermal Power Corporation (NTPC) has also reduced supply it had agreed for. It added that the impact has created an average daily shortfall of 4,700MW, which is partially mitigated with 1,433MW that comes together from CGPL and NTPC. It said an additional 1,500-2,000MW is being bought from the open market (where the rate per unit is capped at R12 by the Central regulator). Pendse said NTPC gives maximum during the peak demand and reduces production to conserve coal in the interim period.

Other contractual procurement comes from independent power producers in Maharashtra, and the Central exchange, which allots states their share from national projects. Mahavitaran gets 6,000 to 9,000MW from the Centre.

Mahagenco not solely responsible

Mahagenco has been operating on short stock for at least a year now. "Ideally Mahagenco should have 30 days stock in advance, but it doesn't have it for a long time," observed Pendse, adding that Mahagenco doesn't get the money from Mahavitaran on a regular basis. "When Mahavitaran doesn't have the money, Mahagenco also faces a financial crunch and can't pay for coal," he stated.

"Mahagenco cannot increase the production all of a sudden. We are not the sole supplier to Mahavitaran, which should also tap other sources instead of harping on the coal shortage," said a company insider.

On April 14 midnight, Mahagenco's various stations had coal stock that would last for 1 to 6 days. The supply gets augmented but the company has not been able to stock coal for the future. Tendering for purchasing coal for Nashik's 250MW unit is expected to be over by next month.

When thermal generation doesn't suffice to mitigate the deficit, hydro projects are run. Maharashtra's Koyna project has been under duress because it is operated as and when needed, putting its water stock under threat.

Political blame game

Even as energy minister Nitin Raut blamed Coal India and Railways for shortage and delayed transport of coal, industry sources said the shortage wasn't entirely to be blamed for power cuts. Raut said the distribution company wasn't paid dues running into several thousand crores of rupees by the state government departments.

Opposition leader Devendra Fadnavis wondered if the Congress-ruled states didn't have power cuts, why was Maharashtra subjected to outages. He said it was because of the failure of the MVA government, which was masking its own faults by blaming the Centre.

Mahavitaran said Bihar, Uttar Pradesh, Madhya Pradesh, Gujarat, Haryana, Rajasthan, Karnataka, Punjab, Telangana, Andhra Pradesh and Karnataka were also enforcing power cuts. Union minister of state for coal and railways, Raosaheb Danve said early this week that the state had faltered in placing an order for the railways rakes required for transporting coal from the mines to generation stations. He said the country produces 80% of its total requirement.

The union power ministry has allowed generation companies to import coal to blend it with domestic coal. It also allowed 25% tolling - a system that allows a company in the vicinity of mines to use coal linkage of others to save time in transporting the fuel. The electricity thus produced is procured by the distribution firm which has agreement with the company whose coal linkage is used.

But Pendse said the price of imported coal was five times higher than the domestic coal. "10%-15% imported coal can be blended with domestic supply. But the cost and the time taken to import it will not be feasible for financially distressed companies," he said, adding that electricity can be bought from solar power producers who don't have power purchase agreements.

3,000 MW
Mumbai's electricity demand on Friday