Power Sector in Bihar – A way forward

Indian power sector is witnessing major changes. The power generating industry is evolving rapidly with private participation and diversification of fuel mix with conducive policy environment. Now there is surge in multidirectional power flows due to development of power trading and power exchange. State Transmission Utilities (STU) and Central Transmission Utilities (CTU) are responsible for operation and maintenance of intrastate and interstate transmission network. Private Public Participation in transmission and distribution system, private participation in nuclear power generation projects, demand side management, franchises in distribution system, renewable energy regime and purchase obligation and many other activities in Indian power sector are picking up pace in the last few years. The Electricity Act, 2003 provides an enabling framework for accelerated and more efficient development of power sector. The Act seeks to encourage competition with appropriate regulatory intervention. As a result power sector is now becoming competitive in overall efficiency gains and in terms of availability of quality power to consumers at competitive rate.

Power sector is a critical infrastructure for development of Bihar and supply of reliable and quality power at reasonable and competitive rate can transform the pattern of agriculture production, village industry development and other commercial and industrial activities can bring renaissance in the rural economy and raise standard of living of people of Bihar.

The per capita power consumption in the State is around 85 units. No new generating units have come up in the State since 1985 other than those in the Central Sector. The total installed capacity in the State including hydel and cogeneration is around 385 MW. The total power available in terms of million units from BTPS, BSHPC and cogeneration from two sugar mills M/s New Swadeshi Sugar Mills, Narkatiaganj and Bharat Sugar Mills, Gopalganj is around 390 MU against a total of 9800 MU available during 2009-10. Thus the total power availability in the state from state sector is around 4% and balance 96% is from Central Sector. The Kanti Thermal Power Station (2×110 MW) is a joint venture of NTPC BSEB called -Kanti Bijli Utpadan Nigam Ltd. During 2009-10 BSEB has purchased 500 MU of power from this joint venture at the provisionally adopted rate of 365 paise per unit. This per unit rate is higher than the average rate of power purchased from NTPC thermal power generating units at Farakka, Kahalgaon and Talchar which is about 2.49 paise per unit. Even with very low plant factor, the cost of generation excluding employee cost, as they are there even without any generation from BSEB’s own generating unit at BTPS is less than the purchase cost from NTPC thermal generating stations. More so own generation puts the Board in more strong footing in terms of energy security and also in terms of power purchase / trading. Another important aspect is equitable distribution of whatever power available in the State. A system has to be there to see that all areas are equally treated in terms of power supply except in special circumstances and lack of such approach is a matter of concern to the Commission. The 17th Power Survey of India has made a forecast that power requirement of the State by 2012 would be around 3600MW. In view of this projection the generating capacity would be required for around 4500 MW on the basis of 80% normative availability. The present availability of power is around 900 to 1500 MW and capacity-wise it is around 1875 MW. As   a result most of the districts of the State are starving of power.

Bihar State Electricity Board is still a vertically integrated power utility responsible for power generation, transmission and distribution of supply in the State. BSEB is also a transmission utility (STU) and a deemed licensee under section 172 (a) of the Electricity Act, 2003.

The Electricity Act 2003 specially stipulated the restructuring of State Electricity Board through unbundling into separate companies. It was initially mandatory but was diluted later on to allow phased implementation. The legal merit of unbundling has been re- interpreted by the Appellate Tribunal for Electricity in its judgment on 15th July 2009, where it is deliberated that unbundling of SEB is not mandatory under the Act. But in practice most of the States have unbundled their SEB. Bihar is yet to do this. There are various incentive available for re-structured SEB and re-structuring appears viable option for growth of power sector in the State.

At present BTPS is the only generating unit under Bihar State Electricity Board. No new or additional unit has come up in the last 25 years.  Board has constructed a number of 220KV and 132KV transmission lines and total of 14 Nos. of transmission lines of 220KV with a circuit km length of 1127 km and 80 transmission lines of 132KV with a circuit km length of 4350 km in the State in the last three years. There are 7 nos. of 220 / 132KV and 62 nos. 132/33KV grid sub-stations commissioned in the State. The work of sub transmission scheme under RSVY. Phase-I Part-I & II under Phase Part-II scheme and work of construction of grid sub-station and 132KV line under State Plan are under different stages of pipeline/ under progress. But the total power evacuation capacity as on now is still 1700MW to 1800 MW only. The distribution system in the State is not stable although efforts have been made to strengthen the distribution system under APDRP and restructured APDRP and other schemes.

Issues to be Addressed to Improve Power Sector Performance in the State

Nuclear Power Generation

Nuclear power is an established source of energy to meet the base load demand.   Today, India is almost self- sufficient in meeting the needs of Indian designed Nuclear Power generating units. Present installed capacity in India is 4560 MW and 5350 MW. Capacity addition is under way. There is target of achieving 20,000 MW generation by FY 2020. Nuclear Power Corporation of India is in talk with NTPC, IOCL, Indian Railway and various Electricity Boards to form joint venture for nuclear power generation. BSE Board and State Government should take up the matter with NPCIL and other appropriate authority for setting up nuclear power plants in Bihar.

Natural Gas / LNG based Power Generation

Gas fired power plants have their advantages over other forms of fossil fuels and can be of great help in meeting peak demand. Nearly 10% of generation in India is gas based. BSEB has proposed combined cycle gas-based thermal power station under Rastriya Sam Vikas Yojna as Gas Authority of India Ltd. is extending the HBJ Gas Pipeline of Bombay off-shore to Haldia pipeline which is to pass through Bihar from Mohania-Sasaram-Dehri-Gaya route. Gas Authority of India Limited is on way to supply of natural gas to Barauni Fertilizer plant.  Board and State Government should set up a separate cell at Apex Level to monitor ,co-ordinate and expedite the matter.

Thermal Power Generation

In the present scenario of availability-based tariff no power utility can survive without having a reasonable generating capacity of its own.  In spite of exploitation of all available energy sources coal would remain the primary source fuel for meeting future electricity demand of the state presently. With financial crunch Board / State Govt. can explore IIP / JVC mode of power generation. Generation initiatives like (1) expansion of BTP ( 2×500 MW)  (2) New plant at Navinagar (3x660MW) through JVC of BSEB, NTPC needs to be expedited. MOU for purchase of power from  M/s Jas Infrastructure Capital, M/s Nalanda Power Company,  M/s Adhunik Power and Natural Resources  Pirpanti has signed by BSEB.  Any difficulty in maintaining schedule of construction / commissioning should be monitored and necessary help a the Government level should be provided.

Setting up of IPP at Banka (4x660MW), Pirpainti (2000MW) and Kahalgaon (2x660MW) (4) Purchase of power through competitive bidding should be expenditure. Now Mega power policy has also been amended to hasten the growth of capacity addition, which allows selling power through tariff based competitive bidding with priority in coal linkage norms. The process needs to be examined / re-looked by the BSEB and the Government of Bihar.

Transmission System

The Board has taken initiative for transmission system under different phases and it is expected that with the implementation of these phases, the transmission capacity would be adequate and will meet the requirement of proper corridor for open access customers. But Board should make a study of all the existing intrastate and interstate transmission system and accordingly prepare a ten-year plan keeping in view of open access requirement so that future demand is adequately met.

Distribution Loss

The distribution is the most critical segment of the power sector and the real challenge of reforms lies in efficient management of distribution system. The present high level of T&D loss in BSEB is a matter of great concern. The Commission has been constrained to limit the level of loss each year at pre defined level and accordingly incorporated in the ARR of tariff petition of the Board. Now the fact is that the Board is not able to measure the actual T&D loss in absence of metering in the system. It is adopting the T&D losses fixed by the Commission in the ARR and arriving at the energy requirement to meet the demand. The Commission has observed that during 2006-07 T&D loss was as high as 57.6%. The energy accounting and audit at various level in distribution system such as 33/11 kV S/S, 33 & 11 KV feeders provides reliable and actionable data on the actual loss comprising of technical, commercial losses & theft etc. but in absence of metering it is not possible to account for losses at different bus voltage level. Out of existing 1502 number of 11 kV feeders the Board has given 277 Nos. 11 kV rural feeders to different agencies on revenue collection based franchise but proper energy accounting is not being maintained. Similarly, as per record provided by Board 16035 Nos. of distribution transformers are provided with meters against total of 51996 nos of existing distribution transformers. But so far distribution transformer-wise energy accounting has not been done. An agency was also hired to take meter reading of such DT for a year but it is hardly of any use in absence of distribution transformer wise consumer billing ledger. These are the serious issues, which needs to be addressed by the Board.

The Commission has also conducted third party energy audit of technical and financial data submitted by the Board in this tariff petition submitted by BSEB. Board has taken action to replace 3.48 lakhs single-phase meter and about 14,400 three phase meter out of 4 lakhs single phase and 26000 three phase meters available. But the number of unmetered consumers has gone up from 8.80 in the year 2006-07 to12.80 lakhs at present. The situation is such that even 440 one number of government office and residential quarter have defective meters. This is gross violation of the provision of Section 55 of Electricity Act, 2003 and this gives an impression that Board is not sincere on this issue of 100% metering which is benchmark for any utility for carrying distribution business. The MIS system has not been implemented in all the districts of Bihar. SCADA system started under PESU area in 2005 but it is yet to be fully commissioned. With growing number of consumers it is not possible to analyses the technical and financial data. MIS system needs to be implemented without any further delay.

The reform needs to start from consumer metering end, which will not only improve the revenue but will reduce losses and improve the existing system stability. Focus needs to be given outsourcing some of the of activities of distribution system like distribution transformer / feeder-wise accountability, energy audit, MIS, increase in outsourcing of collection points, HVDS system in selected feeders etc.

Renewable Energy

Cogeneration from bagasse and generation from biomass has more than 600 MW potential in the State, which can be tapped immediately. There are several success stories of village electrification, and for agricultural and lighting  purpose stand alone type biomass based generation in the state and this needs to be replicated.  State is favourably placed for harnessing solar power on de-centralized basis. This has  immense potential on decentralized basis which also suits our State for meeting the power requirement particularly of rural areas. Such power can be generated without any gestation period.

Bihar lies on low wind zone. A few places like boarder area of Nepal, river bank areas, some advantageous hill formation to tunnelise wind velocity may have some potential for small power generation. C-Wet is carrying out wind measurement at different places Adhoura, Lalganj, Simultala, Raxaul, Bodh Gaya, etc. The actual wind resources can be known only after such survey is done. But there is potential for low velocity wind pumps with improved design.

To promote renewable energy in the State, the Commission has framed regulations on Renewable Power Purchase Obligations, its Compliance and REC Framework Implementation. Under these Renewable Purchase Obligations, the Board shall have to purchase 1.5% of its total energy consumption (total energy input – T&D loss) during 2010-11. Further, the 0.25% of the renewable purchase obligation so specified shall be procured from generation based on solar energy. The Commission has also designated Bihar Renewable Energy Development Agency as State Agency for accreditation and recommending the renewable energy projects for registration.