Odisha against Centre's discom plan to bail out stressed power assets

Odisha has a total power load of 24,632 million units (MU)
The Odisha government is vehemently opposed to the Centre's latest formula to resolve the crisis in stressed power assets by floating an electricity distribution (discom) company. 

Under the latest plan for bailing out the stressed power assets, the central government has proposed to forge a discom to buy power from such stations. The discom, which is still in its nascent stage of conception, is likely to have equity participation of central PSUs in the power sector. The planned utility will ink long-term power purchase agreements (PPAs) with the producers of the stranded assets to help revive their operations. The coal-based generating units have turned stranded due to the lack of PPAs or firm coal linkages or both.

What has disconcerted states such as Odisha is the plan to empower the central discom to supply power to airports, Railways and entities under the Ministry of Defence (MoD). Presently, state-based utilities are supplying power to them.

“If a central government-owned discom is allowed to supply power to Railways, airports and setups under MoD, it will rob states of a sizeable load. This will deteriorate the condition of some state discoms further as they are already crippled by weak finances and climbing debts. We don't agree with this idea and will shortly raise our reservations with the Ministry of Power," said an official source.

Odisha has a total power load of 24,632 million units (MU). Of this, the state's net consumption stands at 17,761 MU after deducting the aggregate technical & commercial (AT&C) losses. Railways consume 1085.85 MU of this net demand.

To tackle the problem of stressed power assets, a standing committee has been formed under the aegis of the Union power ministry. The committee had listed 34 coal-fired thermal power stations as stressed assets set up with an investment of Rs 2.26 trillion. The combined capacity of these assets stands at 40,130 Mw and they are saddled with ballooning debt of Rs 1.74 trillion. Total commissioned capacity is 24,405 Mw with the rest 15,725 Mw under construction. 

Of the 34 power projects, only 17 have been completed. The remaining are either partially complete or under execution. Ten of the stressed power assets are located in Chhattisgarh, followed by six in Odisha, five in Maharashtra and four in Madhya Pradesh. Uttar Pradesh and Andhra Pradesh have two such projects apiece whilst Bihar, Jharkhand, West Bengal, Tamil Nadu and West Bengal have one each.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel