Power scenario of J&K UT: A mix of hopes and woes

Arka Chakraborty and Kasturi Guha

 

It is not a stretch to say that Jammu and Kashmir is currently standing at the proverbial crossroads of development. The new schemes introduced in the UT by the Centre have the potential of turning it into one of the advanced regions of India, but some of the long-standing issues continue to hamper the region’s steady development. J&K’s power scenario is a good case in point. Over the past few months, schemes and grants have been awarded to the Power Development Department (PDD) which has the potential to transform the power scenario in J&K. However, the age-old power issues still remain unaddressed here and, as a result, some of the new moves/projects taken/announced by the Centre and the UT government with regard to improving J&K power scenario does not bode well for the local consumers.

Positive changes to be made in the Power Development sector

1) Underground cable network to connect major hospitals in Srinagar:

 Srinagar, the summer capital of the J&K UT, has a fragile Low Tension (LT) network that breaks down during winters, causing huge problems for the administration and the public. Speaking of which, the Kashmir Power Distribution Corporation Limited (KPDCL) is contemplating establishing a 20 km long 11 KV underground cable network that will cover the city centre and the important areas like Lal Chowk and SMHS, Lal Ded and Bones & Joint hospitals, TRC, Civil Secretariat and some adjoining areas. The Rs. 25 crore project, awarded to KPDCL by the Centre for its ‘best performance’ in implementing centrally sponsored Saubhagya scheme, is expected to ensure uninterrupted power supply in the areas even during the winter and stormy weather conditions.

2) Installation of smart meters in Srinagar and Jammu cities:

‘Smart meters’ will be installed in the cities of Srinagar and Jammu starting November 15. The first phase will consist of the installation of 20000 such meters and this will continue in a phased manner until the completion of the installation of 2 lakh smart meters sanctioned by the central government.

These new meters can be recharged like mobile phones, thus eliminating the need for manual meter reading and paper bill distribution. Rather, the meters will be read remotely from Data Centre at Srinagar and Data Recovery Centre at Jammu, allowing the distribution corporations to know the status of power supply at consumer-end and take prompt action in case of power interruptions.

The project implementing agency REC Power Distribution Company Limited informed that with smart meters, the consumers will be able to know their power consumption pattern and billing in real-time which will help them to manage their consumption accordingly, thereby bringing down their monthly bills. This project is aimed at bringing transparency in metering, billing and collection which will ultimately contribute to decreasing power losses and ensuring quality and reliable power supply.

3) PDD to act strictly against power theft:

In order to lessen unscheduled power curtailment, the PDD in collaboration with the police will conduct regular inspections to eliminate power theft. Apart from regular inspections, the squads will inspect households in areas where the load on a particular feeder exceeds.

4) 850 MW Ratle Hydro Project to be developed through Joint Venture:

As per the recommendation of the Public Investment Board (PIB), the 850 MW Ratle HEP which had been stalled for a long time due to the unilateral withdrawal by the erstwhile developer from the project will be developed through a joint venture between the Jammu and Kashmir Power Distribution Corporation (JKPDC) and the National Hydroelectric Power Corporation (NHPC), with an investment approval of Rs. 5281.94 crore including an Infusion of Equity of Rs. 808.14 crore by NHPC. JKPDC’s equity of Rs. 776.44 crore will be provided as a grant from the central government. This project will contribute to J&K’s realisation of its immense hydropower potential and the UT government is expected to earn more revenue from its hydropower resources.

5) Central Loans to strengthen J&K’s power sector:

Last year, the outstanding dues of the state power department of J&K had reached Rs. 19.84 billion i.e. Rs. 198.4 crore and the NTPC had warned the department of restricting power supply due to non-payment of dues. This time, REC Limited has sanctioned Rs. 27.9 billion i.e. Rs. 279 crore loan under the liquidity infusion program of the central government’s Atmanirbhar Bharat Abhiyan (ANBA) to help the J&K DISCOMs (distribution companies) to help them fully discharge their dues to generation and transmission companies for power purchased and transferred. The Centre has also sanctioned a huge loan assistance amount of Rs. 11024.47 crore to J&K which has made possible the UT government’s liquidation of the said amount of power purchase liabilities by signing a Memorandum of Understanding (MoU) with Power Finance Corporation and REC limited. Of this amount, Rs. 5580 crore is to be disbursed instantly. This move will help in improving the UT’s optimum power purchasing mechanism and power management, taking the UT a step closer to becoming a power surplus territory.

6) Lt Governor for special attention to J&K Union Territory’s power sector:

Lieutenant Governor Manoj Sinha has urged the administration to give special attention to the Jammu and Kashmir Union Territory’s power sector, especially during winter which causes cause disruption of the power system. In a meeting at the Raj Bhavan, Mr. Sinha directed the Power Development Department to keep buffer stock of transformers at every District HeadQuarter; directed the PDD officers to ensure proper functioning of transmission lines, transformers, electrical equipment, repair workshops, timely repairs and replacements of the damaged infrastructure and equipment; and set a deadline of 24 hours in urban areas and 48 hours in rural areas for the replacement of transformers barring remote and inaccessible areas. In another meeting, the LG called for the completion of ongoing projects within the stipulated time limit and for better synergy between agencies for making J&K a power surplus territory. He also directed the NHPC officials to take an innovative approach and explore conventional and non-conventional sources for the development of the UT’s hydropower sector.

 

Deficiencies and reasons to identify the infrastructural loopholes of the PDD in Jammu and Kashmir

1) Privatization of the power sector:

The Centre announced in May that power departments and distribution utilities in Union Territories (UTs) will be privatized. After the Centre’s decision to privatize power in J&K, an engineers’ body opinionated that the move would strike a blow to consumers as the rate per unit will go up to Rs 8 from the current Rs 2 to 3. This would mean a 200% hike for the post-privatization tariff as presented by the report prepared by The Jammu and Kashmir Electrical Engineer Graduates’ Union (JKEEGA) in collaboration with a national-level engineers’ body has been analyzing the cost of energy post-privatization of DISCOMS. JKEEGA president Munshi Majid voiced out his concern and how it would affect the region given its economic fragility as the poor consumers would be burdened to afford the increased tariff. Stating that the average cost of electricity on all India basis is Rs 6.73 per unit. Under the Companies Act, the private DISCOMS would be entitled to charge 16% profit, which would push the unit cost for the consumer to almost Rs 8. He further added that since the Centre wants to do away with subsidy, the common domestic consumers will have to pay a minimum of Rs 8 per unit. The PDD officials also issued strong protests against the unbundling and privatization of PDD and SPDCL, accusing the Centre of not consulting the PDD before taking this major step and warning the same against implementing any such decision and threatening to call for a statewide strike if the government does not revoke its decision.

2) Shutting down of 120 MW of Sewa-II power plant until March ’21:

NHPC’s, State-run hydropower giant, decision to shut down the 120 MW Sewa-II power station in Jammu and Kashmir owing to some damage to its headrace tunnel (HRT) will impede the power generation in the UT. The HRT carries water from the intake to a powerhouse for electricity generation. The shutdown will cause a tentative loss of 157.4 MUs (million units) in generation (design energy) and 35.61 percent in NAPAF (Normative Annual Plant Availability Factor), according to officials. The Sewa-II power station (3 X 40 MW) is a run-of-the-river project with a small pondage to harness the hydropower potential of river Sewa. Located in Kathua district of Jammu and Kashmir, the surface powerhouse with an installed capacity of 120 MW houses three units of 40 MW capacity each designed to generate 533.53 million units in a 90 percent dependable year with 95 percent of machine availability. The beneficiary states/UTs of this power station which are Uttar Pradesh, Uttarakhand, Delhi, Haryana, J&K, Punjab, Rajasthan and Chandigarh are likely to face problems due to the dwindled power generation.

3) Power purchase deficits of JKPDD as flagged by CAG:

The CAG’s performance audit of power purchase agreements and electric revenue collection for 2012-13 to 2016-17 have brought out deficiencies in Jammu and Kashmir Power Development Department (JKPDD). The CAG in its report has signaled shortcomings in power purchase planning, signing and operationalization of power purchase agreements, and collection of revenue. Besides, it has also pointed out financial mismanagement and inefficiencies in internal control.

J&K suffered a power purchase deficit of Rs 14,871 crore during 2012-17. As against an expenditure of Rs 24,299 crore incurred on power purchase during 2012-17, revenue realisation from sale of power was only Rs 9,428 crore, the Comptroller and Auditor General of India (CAG) said in its report on ‘Social, General, Economic (Non-PSUs) Sectors’ for the year ended 31 March 2017. A report tabled in the Parliament stated that the department (PDD) failed to meet its power requirement and the gap between unrestricted demand and self-generation available to the state ranged between 77 percent and 84 per cent. Around 73 per cent to 76% of the power requirement of the state was met through purchase from Central Generating Stations.

The JKPDD made an avoidable payment of Rs 1,420.26 crore towards late payment surcharge and lost the opportunity to avail rebate of Rs 297.92 crore due to deficient financial management. It also had to shell out Rs 33.67 crore towards fixed charges without availing power due to the imposition of regulation for delayed payments. Due to non-completion of transmission infrastructure for evacuation of power, the report said, the department made an avoidable payment of Rs 543.47 crore towards idle capacity charges and energy charges on deemed generation to two power projects. The report said the department failed to implement the revised tariff order approved by the Jammu and Kashmir State Electricity Regulatory Commission, resulting in loss of Rs 10.06 crore to the state exchequer.

Also in the meantime, the consolidated position of water usage charges assessed, collected and the balance outstanding against all the 29 power projects in J&K was not available with the department responsible for assessment and collection, as claimed by the CAG.

Only Rs 3,971.63 crore, 67 percent of the assessed amount of Rs 5,950.55 crore in respect of 17 power projects had been recovered. Out of the total expenses of Rs 4,159.85 crore from the water usage charges fund, 2.40 percent were allocated for the creation of assets, 80.25 percent was used for the purchase of power.  Rs 721.56 crore (17.35 percent) had been transferred to the Common Pool Account, could not be ascertained, the report said.

The revenue from water usage charges had proved to be only an additional resource mobilisation by J&K Government, especially for power purchase, and has not served the purpose of establishment and buying back of hydroelectric projects and for capital investments in transmission and distribution network.

4) Unkept Promises

Promise to make J&K a hub solar power remains on paper. Over the last few years, Solar Energy Corporation of India (SECI) has proposed many mega solar power projects in few districts of the erstwhile state of Jammu and Kashmir (J&K), but the completion of these projects is far from reality. Interestingly, the successive central and state governments over the past few years promised to make J&K a hub of solar energy production but the study conducted by the Centre for Science and Environment has placed J&K at bottom of the list. J&K was placed even below Bihar which has managed to install 20 MW Solar Roof Top (SRT) power.

5) Power Shortage:

J&K accounts for a mere 1.8% of the peak annual demand but accounts for 54% of the peak shortfall aggregated at all India. Despite Uri I HEP’s highest annual generation there seems to have no respite from blackouts for the locals. The consumers still suffer the frequent power cuts, particularly in winter, the power cuts have been longer, frequent and most annoyingly erratic. The load curtailment schedule issued by the department was never implemented properly and they suffered a much higher degree of loading shedding than given in the curtailment schedule. In the scenario of perpetual load shedding, it remains to be seen how J&K, previously a state and now a union territory, fares in peak demand compared to other states and union territories. Looking at the figures of 2019-20, one notices that J&K’s total annual peak demand was a mere 1.8% of the all India demand – J&K has had a peak demand of 3,400 MW compared to all India demand of 1,84,000 MW for the same period. It goes without saying that J&K has by far the highest shortfall between peak demand and peak met amongst them all. The difference between annual peak demand and peak met, in J&K for 2019-20, was estimated at 681 MW which is nearly 54% of the shortfall at the all India level. J&K accounts for a mere 1.8% of the peak annual demand but accounts for 54% of the peak shortfall aggregated at all India. At all India level power sector data, it is clear that India is now energy surplus, both in generation capacity and in energy supplied. In such a scenario, the fact that J&K has such a huge gap between peak demand and supply raises a pertinent question as to why does J&K still have such a large shortfall between peak demand and peak met which leads to a heavy power curtailment program in J&K. When generation is curtailed to match the demand there is no need for power curtailment in any state or union territory. If the utility is willing to pay it should be able to buy energy.

6) The mysterious 20% dip in power shortage: 

Irrespective of the demand, every month in the past several years the peak met has been exactly maintained at 20% less than the peak demand. Keeping in mind the massive rise in the peak power demand and the equally massive fluctuations in seasonal power generation, it is perhaps feasible to believe that this gap has been deliberately maintained. A Greater Kashmir report suggests that this might have been done to minimize the transmission, distribution and commercial losses that the UT incurs every year, but the rigid 20% gap still remains an enigma.

7) CVPPL yet to produce power but using up resources:

The Chenab Valley Power Project Limited (CVPPL) was formed due to a civil society campaign against the exploitation of the erstwhile state’s water resources by the NHPC. It was born out of a Memorandum of Understanding signed between the NHPC, the JK State Power Development Corporation and the Power Trading Company (PTC) in 2010 based on an equal share between the state and the center, with JKSPDC and NHPC both receiving 49% of the shares and the PTC keeping the remaining 2%. The project had immense potential in transforming J&K’s power sector. However, the failure of the government to take policy decisions to a conclusion and the lack of corporate style functioning in CVPPL resulted in the company not being able to produce a single unit of energy in a decade since its inception while the cost of its maintenance keeps rising every year, reaching Rs. 846 crore in the past two years.

8) PDD snaps the connections of bill defaulters:

While the PDD’s decision to crackdown against power thieves to prevent unscheduled power cuts is a welcome move, the department’s decision to snap the power connections of those failing to pay their bills has received criticism. Many residents complain that the COVID-19 situation has a serious effect on their household income which makes it difficult to pay the electricity bills on time. To some, the situation is as serious as either feeding their families or paying the electricity bills. In this situation, the PDD’s sudden decision to snap the power connections of bill defaulters has been frowned upon by many local residents. The Principal Secretary, PDD, however, has stated that this is being done after giving due concessions to consumers keeping the COVID-19 the situation in mind. This might also affect those with health issues who need an uninterrupted electricity supply to survive.

Conclusion

Both the central government and the J&K UT government are infusing huge amounts of resources to strengthen the J&K’s power sector. Liquidity infusion projects are ensuring the survival of the DISCOMs and new projects are being approved to further realize the region’s hydropower potential. However, the problem lies not only in lack of funds but the administrative inertia, of which CVPPL is an example – a company that has failed to produce a single unit of energy since its inception almost a decade back. In order to realise the dream of making Jammu and Kashmir a power surplus territory, administrative vigilance has to be introduced into the power sector. As Lt Governor has rightly pointed out, projects must be completed in a time-bound manner. Also, while the introduction of underground power channels and smart meters in the administrative hubs of the region is a welcome step to the UT’s progress, the fact that the far-flung areas of the UT remain unmetered in the age of ‘smart meters’ and fragile power infrastructure and result in day-long power shutdowns in those areas exhibit a growing regional disparity. Undoubtedly, as suggested by experts, Solar Power projects will create job opportunities and boost electricity production that ultimately will benefit the local population in Jammu and Kashmir. Although it is a challenging task for engineers to set up Solar Power grids on tough terrains of the region the move will prove to be a sustainable solution for the power crisis in the UT. If the development fails to reach the farthest corners of a particular region, it is not developedment in the true sense.