Dabhol power bill may lead to increase in electricity tariffs

Dabhol power bill may lead to increase in electricity tariffs

New Delhi: In what could become a contentious poll issue in the upcoming Maharashtra assembly elections, cash-strapped Ratnagiri Gas and Power Pvt. Ltd, or RGPPL, has billed the Maharashtra State Electricity Board Holding Co. Ltd for Rs314 crore after taking into account the new tariff of Rs4.40 per unit from 1 April.

This will result in either an increase in consumers’ electricity bills or an increased subsidy payout for the incoming state government.

The proposal to increase the tariff from Rs3.60 a unit, rejected by the Central Electricity Regulatory Commission (CERC), was reinstated after Ratnagiri successfully appealed against the decision.

The tariff has risen because of a decision to scale down the project’s capacity from 2,150MW to 1,844MW due to problems with equipment, Mint reported on 15 October.

“The project is generating 950MW today. The final tariff is Rs4.40 per unit," said a top RGPPL executive who did not wish to be identified due to the sensitive nature of the issue. “The bill has been raised after we challenged the CERC order in the appellate tribunal. We are getting the payment shortly. Our company’s survival was at stake."

The bill will increase the price of power paid by state-run Maharashtra State Electricity Distribution Co. Ltd. It is for the first time in India that a power plant that hasn’t been fully commissioned has seen a scaling down of capacity.

Subrat Ratho, managing director, Maharashtra State Electricity Board Holding Co., who has additional charge as principal secretary, energy, Maharashtra, did not respond to phone calls or to messages left in his office and on his cellphone.

The power regulator, in its order, had said the target availability for the generation station did not justify the proposed tariff for 2009-10. The other reason for the increase in tariff is the $75 million fee to be paid to General Electric Co. for the repair of turbines supplied by it.

Once the appellate tribunal “decided in favour of RGPPL, it essentially boils down to the decision of the state government on whether the costs will be passed on to the consumer or borne by the taxpayer in the form of additional subsidies from the state government," said Anish De, chief executive at Mercados Asia, an energy consulting firm.

The project’s cost was originally estimated at Rs10,038 crore, which was revised to Rs11,998 crore. The latest revision pegs the project’s cost at Rs12,182 crore.

NTPC Ltd and GAIL (India) Ltd own 28.33% of RGPPL and the balance is owned by state-owned banks, the Maharashtra government and some financial institutions.

This consortium had acquired the company, which was earlier named Dabhol Power Co., after its original promoter Enron Corp. collapsed.

Political parties in the fray for the 13 October assembly elections for 288 constituencies in Maharashtra were quick to criticize the move.

“The state is facing a shortage of almost 6,500MW today and the situation could worsen in the days to come," said Nitin Gadkari, chief of Bharatiya Janata Party’s Maharashtra unit. He blamed the ruling alliance of the Congress party and the Nationalist Congress Party for this state of affairs.

Vilas Muttemwar, former Union minister and current member of Parliament in the Lok Sabha, representing the Congress, admitted that such a move will have an adverse impact on elections but added, “I am sure that the government will take the right initiative and steps to reduce the impact on consumers."

According to data from the Central Electricity Authority, the western region is the worst affected in the country with around 12.5% power shortage, with Maharashtra having a deficit of 17.6%.

The state had a power supply of 42,098 million units for April-August compared with a demand of 51,090 million units.

Santosh K. Joy and Liz Mathew contributed to this story.