Maha-scam, says Aam Aadmi Party; maha-dud, says Mahagenco

Written by fe Bureau | Mumbai | Updated: Feb 21 2014, 17:39pm hrs
AAPAnjali Damania and Satish Jain alleged that Reliance is buying power at ?exorbitant? costs, which are passed on to the consumer in form of high tariffs.
The Aam Aadmi Party (AAP) alleged on Thursday that R22,000 crore had been wasted in the past three years in Maharashtra due to corruption and inefficiencies in the states power ministry. Party members Anjali Damania and Satish Jain also alleged that Reliance Infrastructure which runs the power distribution business in Mumbai is buying power at exorbitant costs, which are passed on to the consumer in form of high tariffs.

Mahagenco, AAP said, had blown off R10,000 crore in capital expenditure without a resultant increase in production. Power generation at the coal-based plants which was 44 billion units in FY08, it claimed had fallen steadily going down to 38 billion units in FY13, although generation should have gone up by five billion units. The plant load factor (PLF) had dropped from 80% in FY06 to 65% in 2013, AAP members said, although R9,000 crore had been spent on repairs and maintenance.

Jain alleged that Mahagenco lifted only 30.05 mt of coal from CIL although it was entitled to lift 41.97 mt; as a result it lost R5,700 crore over three years, AAP said.

Another R2,900 crore was lost, AAP alleged, because due to the purchase of expensive imported coal, which although high in calorific value, costs twice as much as domestic coal.

In a written response in Marathi, Mahagenco observed that the allegation it had not lifted coal from Coal India Limited was baseless adding that CIL had failed to supply the contracted amount under the Fuel Supply Agreement. The coal received from CIL, it said, was 70% requirement and Mahagenco had paid the miner accordingly. Despite the shortage of coal in FY13, Mahagenco said it had clocked a PLF of 68%, close to the national average. Mahagenco said it had generated 28,729 million units power till January 2014, earning R12,557 crore. The genco claimed it had spent less than permitted by the CERC and therefore, the allegation that the company has spent R10,000 crore on capex was incorrect. All the expenses, Mahagenco, said had been subjected to a CAG audit.

Reliance Infrastructure countered the allegations saying its average cost of power purchases is R4.16 per unit, the lowest in Mumbai, and not over R 6 per unit as alleged by AAP. The discom said it does not buy any short term power at R12 per unit and neither does it buy exorbitantly priced power from sister concerns. The company said it buys the entire capacity of low cost 500 MW from its Dahanu Power Plant and there is no availability of any further power at Dahanu.

The AAP proposed scrapping of regulatory asset charge - difference between the revenue requirements of a discom and the amount realised from consumers - which they said is created by companies by buying expensive power through subsidiaries.

They also demanded immediate removal of cross subsidy charge a cost levelled on high-end customers to reduce the tariff burden on low-end consumers which they claimed prevents fair competition in the marketplace.

Aam Aadmi Party demands that no further capex for further capacity addition should be permitted till PLFs cross a minimum of 75-80%. No new subcritical plants should be permitted. If Mahagenco does not have a capability to run a generation business, they should enter into long term power purchase agreements (PPAs) with NTPC or other efficient companies. Moreover, if they are incapable of improving their efficiency, they should surrender their operations to NTPC, the party said.

The party demanded that an audit should be conducted to determine the quantity and quality of coal used by Mahagenco and its capital expenditure. AAP also said coal imports should not be permitted till the company uses allocations under fuel supply agreement.