MeECL: A Nightmarish Experience for Meghalaya

MeECL is financially in dire straits – apart from amassing a huge amount of debt owed to different utility companies, it has simultaneously taken the onus of finding ways and means to ensure continuum power supply which it has to buy from power companies. The NTPC has time and again served notice to the State-run Corporation to clear pending bills after numerous defaults failing which it threatens to cut the power supply to the state. In 2010, when the MeSEB was corporatized (or reformed) into the MeECL with three subsidiary branches, the power situation has only worsened and improvement is highly unlikely in the near future. First, this is because of the increasing population, expanding urbanization and growing rural electrification which has tremendously increased power demand. Moreover, there exists a difficulty in augmenting installed capacity due to under-performance and inefficiency of existing projects and also the lack of consensus on new projects on account of stiff opposition from local population.

The state’s installed capacity as per data available until 2013 was only 312.7 MW while the peak demand touched 650 MW. Additionally, power is required to be supplied to the various industries and companies which have set up business in droves, owing to the Industrial Policy which makes way for various concessions and rebates. If we look at this closely, we’d actually see that the Corporation would have been minting money (read profit) from the power sold to these various industrial units which are multiplying by the day, thus augmenting its revenue sources. However, that is not the case precisely because there is instead a large-scale evasion of payments which has contributed heavily to the poor financial health of the Corporation.

Last year’s CAG report indicted the Corporation for its tardy association with a Cement Plant (M/s JUD Cement Private Ltd) in Jaintia Hills. Although the Plant had huge outstanding dues, the Corporation conveniently overlooked that fact while still continuing the supply of power to the same dissenting unit. This case is an eye opener indicating perhaps a huge scam where electricity sold to different private industries in Meghalaya is not timely paid (whether in Byrnihat or the countless cement industries coming up in Jaintia Hills), yet no action would be taken by the Corporation to reprimand such fraudulent behavior. Quite expectedly, an ordinary consumer would have his connection cut off if s/he fails to pay his/her bills on time, apart from being penalized.

The MeECL has setup the Financial Restructuring Plan (FRP) to clear outstanding dues in October last year but nothing seems to have come out of it. The total debt the Corporation owes now stands at Rs 470 crore (as per statement from the Chief Minister in the Assembly) while it needs a layout amounting to Rs 600 crore to purchase power for the years 2014-15. The Corporation must get the money from somewhere and one is tempted to suspect if the recent spike in the electricity bill for the winter months of 2013-14 is not meant to bridge this gap of demand pull and supply costs? The official explanation is that winter season is when people utilized many heating appliances, heaters and geysers etc. which is reflected in the huge electricity bill.

The implication of such a presumptuous claim is that since electricity consumption doubled over the winter months the bills would also double accordingly. On closer introspection this seems highly unlikely. Consider a modest household with a monthly electricity bill of Rs. 700. If their electricity consumption doubles, the bill would work out to around Rs 1400. However this is not so if we account for the erratic supply of electricity and load-shedding. Many households complained of a triple or more increase in their bills, something which is completely unreasonable and nonsensical to say the least. This is to say that the same household which normally pays Rs.700 ends up with a bill of Rs. 2500 or more. Certainly there must be a more valid explanation to this phenomenon apart from the cited seasonal change. It is this difficulty to substantiate its claim that many social and political organizations such as the KSU, UDP etc. have expressed their resentment and demanding a roll back of the bills. Although the Financial Restructuring Plan (FRP) was set up to clear outstanding dues, the total debts have only increased with repeated warnings from power companies to clear the debts. The success of the FRP to improve the financial difficulty of the corporation is yet to be seen.

The MeECL borrowing limit was raised by the Government to around Rs 1900 crores which was intended towards promoting investment such as the setting up of new hydro projects to augment the self-generation installed capacity of the state. There are at least 6 hydro projects under different stages of survey and investigation works and the corporation is seeking external financial assistance. For example, the funding of the 240 MW Umngot power project came from the Japan International Cooperation Agency (JICA). The ones that have been commissioned like the Rs. 1273 cr Leshka Power project are performing miserably. The cost of this particular project has been revised repeatedly suffering both time and cost overrun even as project handlers are not brought to account for the delay. This project requires an independent technical auditing to not only establish the actual cost incurred so far but also to explore any financial discrepancies. A stage II of the project with potential to generate 280 MW lies pending in clearance and funding. Is stage II viable at all considering that the project is under-performing (power generated is 10 MW against 126 MW)? It is alleged that the concept and design of the entire project is faulty and is also becoming a one man show situation (similar to the PWD department). MeECL claims that the project would solve problems of power requirement in the state but this claim falls flat as the situation beyond Shillong city is shamefully pathetic.

The recent hullabaloo on the utility bills has impacted all sections of society barring the political and social elites. The KSU along with a few Dorbar Shnong had asked people to withhold payments. The AAP Meghalaya chapter threatened to approach the High Court. Muscles were flexed and daggers drawn to take on the MeECL, all of which remain futile efforts which remain purely rhetorical, only serving the purpose of whipping public sentiments.

The Monsoon experts are of the view that the Meghalaya government should have invested in thermal power projects. The stubborn investment in hydro-electric power projects despite the availability of less expensive alternatives is bewildering. There are 6 pending projects which the government is keen on starting with huge funding from external agencies despite staunch local opposition. One could say that power projects in the state are the favorite hunting grounds for the top engineers to fatten their bank balances.

The reform of the Indian economy and its various sectors such as education and power have been devastating, with only those who have direct access to such facilities benefiting from the same. The last 15 years of misrule has exacerbate crony capitalism which is seeping deep into the system where common resources like coal and spectrum have been frittered for few vested interests. Neo-liberal economists rejoice in the high growth rate derived from public looting of resources. Unfortunately, this trend is here to stay and it is unlikely to stop even if there is a government change in New Delhi in June.

Resources:

1. Official website of Meghalaya Energy Corporation Ltd.
2. Comptroller & Auditor General’s Report 2013 on MeCL
3. Official Website of Meghalaya State Electricity Regulatory Commission

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Phrangsngi Pyrtuh Written by:

Phrangsngi Pyrtuh teaches in a college and is a fellow traveller

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