Tamil Nadu’s crisis: Free TVs but no power

Thousands of families couldn’t hide their glee when they collected free wet-grinders, mixies and fans from a large-scale freebie programme of the Tamil Nadu state government since July last. But today they are a disappointed lot. There is no electricity to run their new acquisitions. And their condition is not likely to improve in near future. Neither would they be able to watch the government’s Arasu cable on TVs gifted by former Chief Minister M Karunanidhi. Over the coming months, several thousands more will collect the free gifts that the chief minister J Jayalalithaa had promised them before the assembly polls. She definitely kept her word, but perhaps forgot about the power. [caption id=“attachment_211547” align=“alignleft” width=“380” caption=“Over the coming months, several thousands more will collect the free gifts that the chief minister promised them before the assembly polls. Reuters”]  [/caption] The plight of the freebie-beneficiaries is symptomatic of a serious crisis that is spinning out of control. Tamil Nadu is acutely out of power which is unlikely to improve any time now. The state needs at least 11,500 MW, but has only 7,500 MW to distribute. The deficit of 4000 MW is likely to worsen as its electricity needs are expected to rise by at least a couple of thousand megawatts by the end of the year. To make matters worse, the state owned Tamil Nadu Electricity Board (TNEB) is in deep debt and has no money to buy power from the market, if at all it is available. Its accumulated debts stand at Rs 45,000 crore and its outstanding payment to private power producers is about Rs 10,000 crore. Reports from the industrial and agricultural belts indicate that thousands of micro, small and medium enterprises (MMEs) are badly disrupted and irrigation in many parts of the Kaveri delta is severely affected. Weaving, textile units are also shutting down. Last week, hundreds of people employed in the MMEs marched on the streets in western districts such as Salem and Coimbatore and clashed with the police. Students preparing for school leaving exams are also badly affected with day-long power-cuts. In the cities and bigger towns, which otherwise face less frequent outages, day long “shutdown for maintenance” is increasingly common. The implications for an industrially and agriculturally vibrant Tamil Nadu are huge. For instance, a single day of protest shutdown by the industrial units in Coimbatore on February 10 has reportedly cost the industry about Rs 400 crore, out of which 20 percent are taxes to the centre and the state. Looking for weak spots in the government, the opposition parties have all jumped into the power bandwagon although they don’t have any solution to offer other than empty rhetoric. Her poll ally and now bete noire Vijayakanth; DMK Chief Karunanidhi; Congress leader Elagnaovan as well as the PMK President Ramadoss hit out at Jayalalithaa. Karunanidhi ridiculed her poll promise wherein she had said that she would improve the power situation within months of coming to power. Ramadoss said the state’s economy was slipping into a paralysis. Elangovan used a twin handle of freebies and her unclear stand on Koodankulam to target her. The CII also expressed its concern on the situation. Although the situation is grave, Jayalalithaa doesn’t have a silver bullet. She promised recently that the power situation will improve from June when a few new plants are commissioned. By June, the state will have an additional 1,950 MW and by October, another 600 MW. She said it would progressively improve and, by mid-2013, it would all be fine. But her promise is at best a hope which is unlikely to plug the demand-supply gap. She said the crisis was because the previous DMK government did not pursue the steps she had initiated during her previous tenure (2001-2006). The state could have added 3000 MW, if the DMK had followed up on her plans, she said. What really are Jayalalithaa’s options? 1. Buying power from the market and a tariff hike With about Rs. 10,000 payment outstanding and a bankrupt TNEB, she is in an extremely difficult situation to buy power even if it is available. The gap between production/purchase cost and the retail price will certainly call for a rationalisation of tariff. The Tamil Nadu Electricity Regulatory Commission recently concluded its public hearing and there was intense opposition to any raise in tariff. The government will have no option but to raise it, however unpopular it will be. Will 2014 elections in sight, will she be able to do it? A tariff hike will not however have a retroactive impact on the financial health of TNEB unless the government raises it substantially. The government will also have to find money for the 6000 MW that it plans to add during the 12th plan period (2012-17). 2. Koodankulam? Ironically, the biggest relief for Jayalalithaa will come from the Koodankulam Nuclear Power Plan (KKNPP), the commissioning of which had been delayed by protests by anti-nuclear activists. Although she appeared to have sided with the protestors, sources say it is likely to commissioned before June. The CII in the state has submitted a memorandum to the state asking for an early commissioning of the plant. “With the state reeling under severe power crunch, KKNPP is the only ray of hope and the government should at least commission the first phase of the plant,” said Mr N.K. Ranganath, chairman of CII Tamil Nadu State Council. Both the units together will get the state 750 MW power. 3. Captive power plants for industries Sources in the private power sector say that the new private power projects are looking for customers from the industries. This will reduce the pressure on the state. Sops such as VAT exemption on furnace oil and diesel for industries and allowing captive power plants to sell excess power to industries directly are some of the steps that can help. This is still a few years away though. At present, there are about 40 such power plants. 4. Power holidays, alternative energy etc Staggered power holidays where predictable power shutdowns are implemented on a “turn” basis, more investment in wind energy etc are additional and routine solutions mooted. The state indeed has considerable scope for wind energy. Serious investment in solar energy can also have an additional advantage of falling capital costs. However, the biggest question is, where is the money?