The Politics of Power

THE LIGHT OF ANDAMANS | VOL 35 | ISSUE 29 | 16 MARCH 2012

The Politics of Power

Amidst this entire hullabaloo, the real victims are the poor Islanders, unaware of the power play at the higher levels. Somebody needs to play referee in this match between Admn and SPCL to put an end to the never-ending blame game.

By Zubair Ahmed

Everyone from those in the Administration to the common man on the streets today accepts the invariable fact that the Admn-run Shipping Services is in shambles and the only solution is to look outward and find private partners. The same perception is shared about the Electricity Department too. In 2003, Suryachakra Power Corporation Ltd (SPCL), the independent power producer started its operations in the Islands with its 4 (5 MW Diesels Gensets) totaling 20 MW.

The recent squirmish between SPCL and the Admn broke out after one DG set of SPCL broke down and another one was shut down for overhauling, creating acute shortage of power in South Andaman. There are many issues which have been kept away from the purview of common man. It was a political decision to have SPCL in Andamans. During the NDA regime, SPCL used all its influences to get the project through. In fact, the power situation improved and at the same time, the whole focus of the Administration in upgrading its own units took a backseat. Presently, the situation as a whole is in a precarious condition for comfort. The dependence on the private player is to the extent of 80% where they hold all the cards. There were no future projects to ameliorate the situation. A potentially dangerous situation had been predicted long back.

The Power Purchase Agreement (PPA) between the department and Suryachakra is alleged to be loaded in favour of the latter and it has been a constant source of irritation in the relation between the two. A detailed analysis of Power Purchase Agreement is long overdue. Since 2003, the Completion Cost has been a matter of dispute. Suryachakra had claimed an amount of Rs 85 crores as the completion cost whereas the Admn did not agree to it. The matter was referred to Central Electricity Authority (CEA). The dispute has been dragging for last ten years without any breakthrough. The cost of the plant was Rs 65 crores and the completion cost as claimed by SPCL was not acceptable to the Admn. SPCL had been claiming the difference amount of about Rs 20 crores.

Speaking to LoA, Jalaj Srivastav, Secretary, Power told that CEA had finally informed that the completion cost to be Rs 77 crores, a difference of about Rs 12 crores. However, another fax on 15 March 2012 received from CEA has perplexed the Administration, which has enhanced the Completion Cost to be about Rs 80 crores, an increase of another Rs 3 crores. The Admn, it seems to have its own doubts about the action of CEA. As usual in the press note, Secretary Power has stated that the Admn is examining the fax about completion cost fixed by the CEA and a decision would be taken thereon. In short the dispute will continue. However, SPCL officials claim that the amount of Rs 77 crore was decided by the Admn and not CEA. CEA has arrived at the figure of Rs 80 crores plus financial ties of another Rs 2 crores. They also feel that the Admn is still indulging in delaying tactics by not accepting the CEA's decision.

As per the PPA, the SPCL had to procure fuel and store it in its 2000 KL facility at the plant. The first violation happened with the onus of fuel supply shifted to the Department. However, Jalaj Srivastav justified it saying that the decision was not wrong as the govt  department has the advantage of buying fuel on subsidized rate. Moreover, he said that SPCL was not in a financial position to stock fuel for 20 days.

Another violation happened when the Admn 'assisted' the SPCL with Rs 2.5 crores and Rs 2.9 crores at two occasions. Why such a sympathetic approach which it says is against the PPA? Why such an approach is now denied? Is it with the change of officials at the helm? Reliable sources informed LoA that SPCL had approached the Lieutenant Governor for Rs 5 Crore loan, and he had instructed the Chief Secretary to provide the loan and the CS had assured SPCL that the amount will be cleared in a couple of days. However, at some level the issue took a u-turn and the loan was denied citing it as violation of PPA.

Jalaj Srivastav informed that the Admn took SPCL's case for loan to the ANIIDCO also but the Board of Directors after due diligence and enquiry from the banks, decided that the loan cannot be granted. However, it is learnt that ANIIDCO as a term lending institution does not extend short term loans. Moreover, SPCL was seeking working capital funding, for which they should have approached commercial banks. “ANIIDCO does not provide loans to the tune of Rs 5 crores,” said Mohammed Pervaiz, General Manager, ANIIDCO.

After setting up the IPP in Andamans, Surya Chakra Power Corporation launched IPO in 2007 which was rated average and its net profit declined 76.62% in the December 2011 quarter. The precarious financial situation of SPCL is blamed for denial of loans by commercial banks.

SPCL is also blaming that there is an average loss of about 10 KL of fuel during transportation, for which they suspect some foul play in connivance with IOC officials.

The total power requirement of South Andaman was about 22 MW as in December 2003. At present the demand is about 33 MW, an increase of about 10 MW from 2003. The total power generated by Chatham Power House and Phoenix Bay Power House is about 16 MW and the rest 20 MW is generated by IPP SPCL. Every year, in the last decade, the increase in power demand was about 1 MW i.e, about 10 MW in a decade. What was the Admn doing all these 10 years, and will do in the next 3 months?

When asked about the sluggish attitude of the Admn towards infrastructural requirements, Secretary Power agreed that the Admn has a very lazy mindset. He also blamed the Superintending Engineer (SE) for the precarious condition. He said that the Chief Secretary in his weekly Coordination meeting since July, 2011 has been instructing for hiring of containerized DG sets which can be deployed within very little time.  However, SE (Elec) had assured in December, 2011 setting March, 2012 as its deployment period.  He said that SE failed in procuring the gensets and that he has been sent on a long leave.

He also said that by the end of March, 2012, one M/s New Bharat will be able to deploy 5 MWs of additional power in Port Blair.  When asked about hiring gensets from private parties, he said that there is no other alternative. He said that the work culture and performance of the department is not satisfactory. He also accepted the fact that dept-run power plants have sub-optimal utilization. Out of six gensets only 5 are in working condition at Chatham Power House. One genset procured after tsunami was lying idle for a long period.

There is a proposal to hire three containerized DG Sets of total 15 MWs within three months.  Thus apart from the existing capacity, 5 MWs of M/S New Bharat and an additional 15 MWs  from the new hiring of containerized DG sets should provide a backup of power of 20 MWs , in other words, even if entire Surya Chakra Power Plant would need to be maintained, there would be 20 MWs additional back up capacity so that there is no disruption of power.

He conceded that the T&D loss is very high at about 19.4%. However, he said that it is far low than the national level. In comparison, Srivastav said that the T&D loss in Delhi was about 58% in 1992.

The Ping-Pong over power crisis is continuing with the ball in SPCL's court at present. SPCL sources informed that Vijay Kumar, Manager SPCL is coming to Port Blair on 19 March 2012 and another rejoinder is on the anvil. It is pertinent that amidst this entire hullabaloo, the real victims are the poor Islanders, unaware of the power play at the higher levels. Somebody needs to play referee in this match to put an end to the never-ending blame game.