To stay in power, Modi has to solve power issue

VADODARA: If Chief Minister Narendra Modi swept to power with a huge mandate, its power, although of a different kind, that will turn out to be an acid test for him as he gets down to governance.
For, problems dogging this sector are many. From charging the highest tariff in the country, to having to source fuel like coal from long distances and capacity shortage, to the contentious issue of metering in the farm sector, power has posed serious problems to successive governments.
The biggest hurdle comes in the form of high tariffs.The problem lies in the fact that as much as 89 per cent of power generated by the Gujarat Electricity Board (GEB) is through thermal power stations that operate on coal, natural gas, lignite and RFO, and hence the power tariff is dependent on the price, quality and availability of these fuels.
Despite higher plant-load efficiency, GEB''s fuel cost per unit, which was Re 1.24 per kwh for the year 1999-00, is quite high compared to other state electricity boards in the western region. The Maharashtra State Electricity Board charges 85 paisa per kwh and the Madhya Pradesh Electricity Board charges 65 paisa per kwh.
GEB officials say that this disparity is caused by many factors such as non-availability of coal reserves in the state, distance from the collieries to the power stations of GEB, allocation of poor quality indigenous coal, as well as insufficient allocation and availability of natural gas. Sources indicate that whatever be the reason, the steep power tariff is affecting the development of the state and industrial growth.
The sector is also faced with the railway ministry''s reluctance to rationalise indigenous coal linkage to reduce railway freight, ensure quality coal that would match plant design parameters, save substantial cost for GEB and will ensure optimum utilisation. Sources, however, maintain that this has serious implications as it is the consumer who has to share this burden.
Modi has his task cut out here — to convince the Centre to concede to the demand of rationalisation of coal linkage.
Another major problem faced by GEB is that collection of electricity duty is adjusted towards the subsidy amount to be paid to the board and this has hampered generation of funds for setting up of its own power plant. It has not been able to achieve this since 1990.
Before introducing horse power (HP)-based system of power tariff to the farm sector in 1990, GEB used to collect electricity duty from farmers as supply of power to them was metered.
This generated enough electricity duty that was utilised in setting up power stations.
The board also enjoyed financial support from the Planning Commission for setting up of new power stations in the state, having established all its stations between 1960 and 1990.
This funding stopped after it began adjusting electricity duty towards subsidy amount.
This, in turn, led to IPPs setting up power stations to which the board had to pay huge amounts to purchase power.Even if it is not buying, GEB has to pay huge amount of fixed cost to the IPPs.