Biggest Power Scam in Maharashtra; probably the biggest in India for Power Sector!

sachinbhise · #1 12-20-2013

With the Lok Sabha elections 2014 knocking on door, all the political parties are digging out the scams of the rival parties. While corruption is the biggest issue on which AAP fought this Assembly elections in Delhi and barred Congress from ruling once again, Maharashtra is no behind the sleaze. This year we saw a biggest scam in Irrigation department wherein crores of rupees were vanished with very minimum land under actual usage for irrigation. The Government was trying to settle down with this scam but recently their confidence was again shattered by one biggest rip-off, this time, in Power sector. Unfortunately both these ministries belong to Nationalist Congress Party. Let us now see in details what this scam is and how big it is in size.

Post trifurcation of MSEB in 2005, there are two main companies, Mahagenco and MSEDCL. While Mahagenco is responsible for generation of electricity which sells power to MSEDCL, MSEDCL is responsible for distribution of electricity and in turn recover the bills from consumers like us. This much talked fraud happened in Mahagenco as well as MSEDCL. There is a huge difference between the cost of erection of power plants and the actual expenses shown by Mahagenco during their multi-year tariff petitions. The cost of commissioning for Parli Thermal Power Station of 250 MW is shown as Rs. 1500 Crore whereas the cost of Tata Thermal Power station of same capacity is Rs. 1000 Crore. This implies that Government owned and operated power plants incur more cost than that of the private power producers. Now, why this difference? We have to think from different angle. The other important factor in the cost of power plant is that of fuel which is nothing but coal used in majority of power plants being thermal in design. The coal purchased by Mahagenco from CAIL (Coal Authority of India Limited) is cheap in price, low in quality and has high ash content due to substandard in nature. Due to this reason CAG has mentioned that Mahagenco had a loss Rs. 6852 Crores. While this fraud was being continuously carried out since 2005 till date, the parallel various irregularities were also happening in MSEDCL.

This deceit is basically related to the revenue realized on account of agriculture pump connections. There is an enormous difference between actual distribution loss on account of agriculture pump connections and those shown on paper during the Annual Revenue Requirement. Basically there are two components in energy loss, one is transmission loss and the other is known as distribution loss. As per the International and National Standard norms, transmission loss is benchmarked to 4% and distribution loss is at the maximum of 12%. But Mahatransco (Transmission Company for MSEDCL) shows it as 5 % and distribution loss is stamped as 15%. Now, here is a big hitch in this! Even if MSEDCL claims that the distribution loss is 15 % but the actual figure is more than that, at some places it is more than 25 %. But this extra distribution loss is purposely kept hidden during the tariff revision petitions.

Now let us see how this loss is kept hidden and how this gives rise to corruption! MSEDCL deliberately shows the usage of power consumption for agriculture pump connections twice or thrice the actual consumption; this way hiding the loss. MSEDCL supplies power to approximately 35 Lakh agriculture connections. But out of those more than half means 17 Lakh pump connections are unmetered. On top of it, the surprising this is that – an actual connection of 3HP (horse power) is billed for 5HP, 5HP is billed for 7.5HP. The most shocking thing just got exposed in Raver area of Jalgaon district wherein a farmer was having an actual connection of 7.5 HP pump motor but he was being billed for 17.5HP. Actually in market the pumps of 17.5HP are not available at all. Once the HP is increased the bill amount will automatically increase. By this means if a farmer gets the electricity bill, he obviously tries to evade the bill payment. Either they don’t pay entire bill amount or sometimes gets convinced for the part or half payment. On the other hand, MSEDCL gets the subsidy from government on the entire bill amount of exaggerated HP capacity. In short, the energy which is not at all supplied by MSEDCL is recovered in the form of subsidy from government.

If one feeder (supply cable) has a connection of 100 agriculture pump connections and if that feeder is billed for 100000 KWH units consumption, then that feeder billing consumption should be around 70000 to 80000 KWH Units. But in case of MSEDCL they bill it for 200000 to 300000 KWH units consumption i.e. for the consumption which is not sold. The main advantage of this fraud to MSEDCL is that – more the fake units billed more recovery of subsidy from the government.

A farmer pays around 75 paise per unit for the electricity bills. If due to excess bill amount a farmer doesn’t pay the bill, even then on excess consumption bill amount MSEDCL gets a subsidy of Rs. 1.35 per unit! Then in whose glass this juice goes? One will wonder about can be achieved by doing all this jugglery? But the culprits are getting a huge chunk from this. MSEDCL claims that they supply 23% of power out of their total generation. But in real scenario, it is only 10-11% power which is delivered to farmers. The second advantage – they can hide a 12% distribution loss in this form and also get the subsidy from government. This year, the total amount of subsidy received form government is Rs. 3100 Crore out of which around Rs. 1200 Crore is manipulated means a fraud. The latest excellent example of this fraud –Akot area in Akola district, all the 5000 farmers on same agriculture feeder have the same electricity bill amount every month! How can the consumption of all these farmers be same; can MSEDCL not ask it to itself? The surprising thing - Ex-power minister for state Sudhakar Gangane is having agriculture connection out of these 5000 farmers!! This implies that MSEDCL has a nexus of corruption within itself.

MERC (Maharashtra Electricity Regulatory Commission) has capped the distribution loss to 12% but the actual loss is more than 27 %. The difference of 15% is actually the fraud. If this loss of 15% is converted in to financial figures it accounts for Rs. 7200 Crores. Ultimately this amount is recovered from us only in the form of upward tariff revision.

-Sachin Bhise

Biggest Power Scam in Maharashtra; probably the biggest in India for Power Sector!

With the Lok Sabha elections 2014 knocking on door, all the political parties are digging out the scams of the .....