Govt shuts plants to buy pvt firms’ power

Consumers to pay around Rs 4,000 crore as state wrongly calculated demand for power.

The Maharashtra government has been forced to shut down its own power plants that generate about 6,379 mw of electricity as the state-generated power is more expensive than the market price, and also due to excess availability of power. The government, wrongly calculating the estimate of demand in future, had signed power purchase agreements with private power generation companies in the past.

Now the power is available from the private players but the demand has not grown as expected, as a result of which the state has excess power. Despite having excess power, however, the consumers have to bear the burden of about Rs 3,998 crore as fixed electricity charges, as the power from private companies has to be bought, and cannot be stored. Hence, the government has closed six power plants so far, said Union energy minister Piyush Goyal.

The activists in the power sector have approached the Maharashtra Electricity Regulatory Authority (MERC) asking to revoke the agreements with the private companies so that the state-owned power could be utilised.

As per the detailed information on the shut down of plants, in 2016-17, plants generating energy of around 6,379 mw have been closed for which fixed charges are Rs 3,998 crore to be paid by the consumers. More plants will be shut down in 2017-18, taking the total energy generated by such power plants to 8,961 mw. This will cost a total of Rs 4,357 crore to the consumers as fixed charges.

An official from the energy department admitted that some of the plants have shut down due to costly production and low demand. “The Parli power plant is closed due to water shortage, Bhusawal due to costly production. Industries are looking for cheaper power, which is available from the private players and hence there is a setback to the Mahagenco’s power. There are no consumers for the state-generated expensive power and consumers are preferring private cheap electricity,” the official said on condition of anonymity.

At present, power from Mahagenco costs Rs 4.25 per unit. Meanwhile, power from NTPC costs Rs 2.50 per unit, while private companies charge Rs 3.25 per unit and private distributors charge Rs 3.30.

Minister Piyush Goyal has also agreed in written answers to the Lok Sabha in July that there were 26 plants in total in the country that have zero generation, of which six are in Maharashtra.

Activists in the power sector have blamed the situation on the state government for not correctly estimating the demand for electricity in the future. “The government had considered average five per cent growth in demand for electricity. However, the industries’ demand in the last five years did not increase, as many have shifted to open grid than the state power,” said activist Pratap Hogade, who has also approached the MERC.