1. OVERVIEW
Bihar is amongst India's most backward states in terms
of industrialization and socio-economic
development. Reflecting this, or perhaps being the
very cause of it, is a pathetic power sector. In terms of power
generation capacity, power transmission and distribution
network and also with respect to power sector reforms,
Bihar has just not been able to register even a modicum of
achievement. To sum up the abject picture that one is
compelled to paint of Bihar's power sector, we have—
consummate failure of the state electricity board to add
fresh power generation capacity for years on end,
unhealthy reliance on power generation from Central
government agencies, failure in attracting private
investment in the power sector, unacceptably high
ATC losses exceeding 50 per cent, inability to
trifurcate the state electricity board, etc.
As of December 2010, Bihar had an installed
power capacity of 1,855 mw, which was
dominated by allocation from power
plants of Central government agencies,
mainly NTPC, NHPC and Damodar
Valley Corporation. Central allocation
accounted for 1,261 mw, or 68 per cent
of the total. While coal-based capacity
accounted for 1,132 mw, hydropower
capacity accounted for the
remaining 129 mw. The state sector
had 585-mw of power capacity that
included coal-fired power capacity
owned by Bihar State Electricity
Board and 55 mw of small
hydropower capacity of Bihar State
Hydroelectric Power Corporation.
Private sector companies have had a
very limited presence in Bihar's
power sector—nothing more than
9.5 mw of renewable energy capacity
as of December 2010.
POWER SUPPLY POSITION IN BIHAR |
|
Peak
Demand
(MW) |
Peak
Met
(MW) |
Peak
Deficit
(%) |
Energy
Reqmt
(mln
kwh) |
Energy
Available
(mln kwh) |
Energy
Deficit
(%) |
2002-03 |
1,389 |
1,325 |
-4.6 |
8,096 |
7,422 |
-8.3 |
2003-04 |
973 |
788 |
-19.0 |
7,588 |
5,878 |
-22.5 |
2004-05 |
980 |
980 |
0.0 |
7,201 |
6,476 |
-10.1 |
2005-06 |
1,314 |
1,116 |
-15.1 |
7,955 |
7,218 |
-9.3 |
2006-07 |
1,399 |
1,162 |
-16.9 |
8,425 |
7,741 |
-8.1 |
2007-08 |
1,882 |
1,243 |
-34.0 |
9,155 |
7,933 |
-13.3 |
2008-09 |
1,842 |
1,333 |
-27.6 |
10,527 |
8,801 |
-16.4 |
2009-10 |
2,249 |
1,509 |
-32.9 |
11,587 |
9,914 |
-14.4 |
2010-11 (Apr-Dec) |
2,073 |
1,659 |
-20.0 |
9,792 |
8,422 |
-14.0 |
2011-12 (Projected) |
3,607 |
1,225 |
-66.0 |
19,905 |
9,927 |
-50.1 |
Bihar's power sector has seen
much deterioration from the X Plan
(2002-07) onwards; the slide
transcending into the ongoing XI Plan
as well. In 2001-02, the terminal end of
the IX Plan period, Bihar had a peak
power shortage of 8.6 per cent and an
electricity deficit of only 4 per cent. This
was well in tune with the national metrics
prevailing then. By the end of the X Plan period,
peak power shortage had climbed to 17 per cent
and energy deficit had worsened to 8.1 per cent. In
the first three quarters (April to December) of 2010-11,
Bihar was contending with peak power shortage of 20 per cent and an energy deficit of 14 per cent. According to estimates by the Eastern Regional Power
Committee, Bihar's power woes are feared to continue in 2011-12.
2. NEW POWER GENERATION CAPACITY
Addition of power generation capacity in Bihar is a multifarious activity involving Central agencies, Bihar
State Electricity Board and the private sector. By itself, BSEB is not expected to contribute much leaving
Central agencies and private enterprise to play a domineering role.
2.1 BSEB projects
Bihar State Electricity Board has had a disastrous time with respect to adding new power generation
capacity. In the X Plan period (2002-07), not a single megawatt of capacity was commissioned. In the XI
Plan period (2007-12), matters will be no different. At the moment, there is only one project that
BSEB is pursuing-the 2x250-mw extension project at the Barauni thermal power project in
Begusarai district. Much pre-project work has been completed, such as land acquisition,
coal and water linkages, etc. BHEL is likely to be mandated the order for supplying
main plant equipment. According to BSEB estimates, the project is likely to be
fully commissioned in the second half of 2014. For Bihar, the Barauni TPS
extension is of great importance as it will entirely serve the state. Once
commissioned, it would take BSEB's total thermal power capacity from the
existing 530 mw to over 1,000 mw.
2.2. NTPC joint ventures
Following its failure to contribute towards new power generation capacity,
Bihar has been taking recourse to NTPC's expertise. In the years ahead,
NTPC is expected to play a significant role in helping Bihar add new
power generation capacity through joint
ventures. Speaking to Electrical Monitor
from Patna, senior BSEB officials said that
NTPC has significant expertise in thermal
power generation, and is usually faster
than state government agencies in
matters like coal linkages, environmental
clearances, water allocation, etc. Besides,
NTPC has a large number of coal-fired
stations in Bihar giving it much of local
experience. On its part, BSEB (or the
Bihar state government) could be in a
better position to handle issues like land
acquisition, officials said.
NTPC currently has two separate joint
ventures with BSEB to implement the
2x195-mw Muzaffarpur thermal power
project and the 3x660-mw Nabinagar
supercritical power project. "In both the joint
ventures, NTPC is a majority and dominant
partner," BSEB officials noted.
The first joint venture is Kanti Bijlee Utpadan
Nigam Ltd that would implement the 2x195-mw
Muzaffarpur extension project. This project was
earlier to be taken up BSEB by itself, but was later
transferred to the JV as the utility could not make much
headway. By current thinking, the project (originally a 2x250-
mw venture) is scheduled to commission by 2012-13. Bihar will
get 85 per cent electricity generated from the Muzaffarpur project.
The second JV is Nabinagar Power Generating
Company Pvt Ltd that will implement the 3x660-mw
coal-fired plant running on coal from the Nabinagar and
Barun blocks. Coal linkages have been firmed up and
NTPC is currently finalizing the main plant equipment
for the supercritical project. Estimated to cost nearly
12,800 crore, the Nabinagar project will feed 75 per cent
of its output to the Bihar grid. Commissioning is
scheduled for 2015-16.
2.3. Tariff-based bidding
What can bail out Bihar from its power crisis is its ability
to procure long-term power from external sources, using
both modes (Case-1 and Case-2) of the tariff-based
competitive route. As discussed, the state electricity
board, by itself, would never be able to make significant
contribution to the power capacity addition endeavour.
Here is a summary of BSEB's achievements in its tariffbased
power procurement drive.
Bihar versus Jharkhand |
Much of Bihar's power woes can be
traced to the bifurcation of November
2000 that led to a new state Jharkhand
being carved out of erstwhile Bihar.
Jharkhand inherited much of the undivided
Bihar's mineral wealth and hence was in a
better position to pursue mining-related
asset creation like coal-based power plants
and metallurgical units. According to
statistics released by the Eastern Regional
Power Committee, Bihar is expected to
sustain a peak power deficit of 42.2 per
cent in 2011-12, as against a very benign
5.8 per cent for Jharkhand. Bihar's peak
power demand in FY12 is expected to be
2,300 mw against which only 1,330 mw
would be met. In the case of Jharkhand, the
comparable levels are 1,200 mw and 1,130
mw. In terms of energy demand also, Bihar
would be in a much worse situation than
Jharkhand. Bihar's electricity demand
during FY12 is estimated to be 13,706
million kwh that is expected to be fulfilled
only to the extent of 11,210 million kwh,
implying an electricity shortage of 18.2 per
cent. Jharkhand would have a more
manageable electricity shortage of 11 per
cent in FY12.
One striking aspect of Jharkhand is that it
has been able to meet most of its electricity
demand without much reliance on Central
government agencies. This unfortunately
has not been the case with Bihar, and has
turned out to be the state's biggest
undoing. Out of the total 11,210 million
kwh of electricity that is expected to be
available to Bihar in FY12, as much as 93
per cent would be from Central agencies.
Jharkhand's reliance on Central agencies,
measured thus, would be only 45 per cent.
Bihar and Jharkhand: Relative Performance* |
Parameter |
Unit |
Bihar |
Jharkhand |
A. Expected Peak Demand |
MW |
2,300 |
1,200 |
B. Peak Demand Met |
MW |
1,330 |
1,130 |
C. Peak Demand Deficit |
per cent |
42.2 |
5.8 |
D. Expected Energy Demand |
mln kwh |
13,706 |
7,346 |
E. Energy Demand Met |
mln kwh |
11,210 |
6,540 |
F. Energy Deficit |
per cent |
18.2 |
11 |
G. Generation from Central Utilities |
mln kwh |
10,416 |
2,961 |
H. Dependence on Centre ( G as % of E) |
per cent |
92.9 |
45.3 |
*Projections for 2011-12 made by Eastern Power Regional Committee |
|
Case-1: Under Case-1 of the tariff-based competitive
bidding route, Bihar has not had much success. On at
least two occasions in the past three years, the state has
failed to elicit adequate response to its Case 1 power
procurement drive. Speaking to Electrical Monitor, R.P.
Chaudhury, Chief Engineer (Transmission), Bihar State
Electricity Board, confirmed that the power utility has so
far tied up 450 mw under Case 1 through a lone instance
involving the Essar Group. The 25-year power purchase
agreement, signed with Essar Power Jharkhand Ltd, is for
procuring power at a levelised tariff of
2.64 per kwh
from Essar's upcoming 1,200-mw Tori-I coal-fired power
plant in Jharkhand's Lategarh district.
Chaudhury also noted that BSEB has been mandated to
procure at least 1,500 mw under Case-1. With 450 mw
already tied up, the remaining is likely to be realized
through a Case-1 procurement drive currently underway.
The official explained that eight entities have been
technically qualified and financial evaluation is in
progress. The utility hopes to tie up at least 1,050 mw by
the end of July 2011.
Case-2: It is encouraging to note that Bihar has taken
the lead in promoting large projects under Case-2, an
achievement that not many state government power
utilities have recorded. By current thinking, Bihar would
have access to 3,366 mw of power generation capacity
from three such projects expected to commission in the
XII Plan period. In the process, Bihar will also see the
emergence of supercritical power technology in the state
from these projects.
Case 1 and Case 2 |
Case 1 and Case 2 represent two distinct modes used by
power utilities in firming up long term power purchase
agreements with suppliers, under the Competitive Bidding
Guidelines issued by the Union power ministry in 2006.
Under Case 1, the supplier is free to decide on all parameters
of the power supply, including nature and location of project, fuel
type, etc. Even the source of power (the power generation plant)
need not be located within the political boundaries of the state
seeking power procurement.
Under Case 2, the power utility procures power from a
supplier through a designated new power generation project.
When the procurer is a state government utility, the
agreement revolves around a new power generation project
located within the state. In Case 2, the state government plays
a very active role in helping the power developer set up the
project. Usually, the state government would assist in matters
relating to land acquisition, fuel linkages, securing
environmental and other mandatory clearances, etc. The
supportive activities carried out by the state government are
through a designated special purpose vehicle whose
ownership is then transferred to the private developer
selected through the tariff-based bidding route.
In both the cases, the long-term power purchase agreement is
usually for a period of 25 years. The tariff is subject to approval by
the state electricity regulatory commissions or the Central
Electricity Regulatory Commission, as the case may be.
Developers of merchant power plants (where there are no firm
power purchase agreements and the entire risk is borne by the
developer) would normally use the Case 1 route to enter into
power supply agreements with power utilities.
The Union power ministry has stipulated that all power
purchases made by utilities after January 5, 2011, would have to
be made using the tariff-based competitive bidding route. Till
then, power producers, mainly those setting up greenfield plants,
could enter into a memorandum of understanding with power
utilities governing the terms of power purchase.
|
Dwelling on the details, senior BSEB officials
explained that the three projects structured under
Case-2 were Buxar, Lakhisarai and Pirpainti, each with
capacity 2x660-mw. All of them would be based on
supercritical technology. A special purpose vehicle
Bihar Power Infrastructure Company Ltd, formed as a
joint venture between Bihar State Electricity Board
and IL&FS, is acting as the bid processing agency for
the three projects. Officials said that the bidding
process should be concluded in the next two months
or so. All the three projects are scheduled to
commission in the latter half of the XII Plan period.
According to information available, while Bihar will
get 85 per cent of the power generated from the three
projects, with Haryana, Rajasthan and Assam
procuring the remaining 15 per cent.
BSEB officials said that the land process of land
demarcation and acquisition has begun in all the three
projects. Over 3,300 acres of land has been demarcated
for the three projects together and Industrial
Development Authority, Bihar, has been entrusted with
the land acquisition process.
POWER CAPACITY IN BIHAR |
(As of 31-Dec-2010, in MW) |
|
Thermal |
Hydro |
RES* |
Total |
Central |
1,131.70 |
129.43 |
0.00 |
1,261.13 |
State |
530.00 |
0.00 |
54.60 |
584.60 |
Private |
0.00 |
0.00 |
9.50 |
9.50 |
Total |
1,661.70 |
129.43 |
64.10 |
1,855.23 |
*Renewable energy sources, mainly small hydro |
Three special purpose vehicles have been formed that
will be handed over to the respective developers to be
selected by the tariff-based bidding route. The projects
are expected to cost around
20,420 crore together.
2.4 Role of IPPs
Bihar has traditionally never been to attract private
investment. While there was some interest with
respect to mining and metallurgical industries before
the bifurcation in November 2000, these proposals
were in geographical areas that are now part of
Jharkhand. Present-day Bihar is much inferior to
Jharkhand in terms of natural endowments, mainly
mineral wealth.
Lack of natural resources and the general
backwardness of the state were responsible for the
indifference attitude that Bihar has elicited from the
private sector. Matters are slowly changing as the
eastern state has begun to seek private sector interest
with sincerity and seriousness.
The State Industrial Promotion Board (SIPB) of Bihar is
the main agency for channeling private investment in the
state. Thermal (coal-based) power has been the biggest
investment avenue, at least in terms of aggregate investment envisaged. Apart from this, the private sector
has identified metallurgy, cement, sugar and distilleries
and educational institutions as key areas of investment.
Recent statistics from SIPB indicate that as many as 46
agreements have been signed in Bihar to set up coal-based
power plants envisaging a total investment of
1.45
trillion. However, there has not been demonstrable
progress with total actual investment standing at just
176 crore.
BSEB officials speaking to Electrical Monitor concurred
that investor interest in the state's thermal power sector
has been picking up slowly but nothing can be said about
the timely conversion of this interest into tangible
assets. Except for about half a dozen projects where some
progress has been made, that too in pre-project stages,
the overall show is none too inspiring, at least at the
moment. The promising six projects include those of Jas
Infrastructure, Nalanda Power Company, Ganga Power
(Adhunik Group) that have begun the land acquisition
process and are in an advanced stage of securing
mandatory clearances. Based on the current level of
progress, it is estimated that six projects (see table) will
move to the construction phase in the coming years, and
could commission in the XII Plan period. These six projects aggregate 9,920 mw of new power generation
capacity and in some cases, involve the use of
supercritical power equipment. Bihar State Electricity
Board would get at least 25 per cent of the power
generated from those projects that have signed MoUs,
officials said.
IPP PROJECTS IN BIHAR (MOU ROUTE)* |
Promoter |
Location |
District |
Capacity |
Cost |
|
|
|
(MW) |
(`crore) |
Jas Infrastructure Capital Pvt Ltd |
Bhaunsi |
Banka |
2,640 |
11,120 |
Nalanda Power Company Ltd |
Pirpainti |
Bhagalpur |
2,000 |
9,260 |
Ganga Power & Natural Resources |
Pirpainti |
Bhagalpur |
1,320 |
7,500 |
India Power Corporation Ltd |
Areraj East |
Champaran |
1,320 |
7,280 |
AES India Pvt Ltd |
Jagdishpur |
Bhagalpur |
1,320 |
8,120 |
Mirach Power Pvt Ltd |
--- |
Lakhisarai |
1,320 |
7,360 |
*Partial list |
3. THE WAY FORWARD
Bihar's power sector is today in a state of peril. If
extreme steps in resurrection are not taken in good
time, the eastern state will quickly find itself in a
devastated condition—indeed a point from where
recovery would be even unthinkable. This study has
taken a closer look at the power sector from the supply
side—basic power generation units. This is only one
aspect; Bihar's power sector woes are all-pervading and
are unfortunately working in unison towards a
comprehensive disaster.
Yes, Bihar has failed to create significant new power
generation capacity for the past twenty years, and on
this count, it must do better. The state electricity
board has failed to do much in terms of new
generation capacity and all hopes are now pinned on
Central utilities like NTPC, and the private sector.
While these efforts will fructify in the years to come,
Bihar needs a systemic change to ensure that more
power does not only mean more financial losses,
which is ironically the case today.
It is estimated that BSEB's cumulative losses are in
the order of
7,000 crore with state government
agencies alone accounting for
3,000 crore. ATC
losses are incredulously high at over 50 per cent.
Losses of BSEB amount to
3 crore per day. As against
a daily requirement of 2,000 mw, only 150-200 mw
can be generated within the state. Around 1,000-
1,200 mw of expensive power has to be purchased
from Central utilities.
Except for capital city Patna, availability of electricity
is generally poor. The statewide per capita power
consumption is a measly 110 kwh per year, as against the
national average of over 700 kwh.
When one takes a look at Bihar's power distribution
sector, it is complete mess. An estimated 11 lakh
consumers have un-metered connections or meters that are not functioning. Bihar has not been able to effect
any revision in tariff in recent years. Hence, while
power generation is an important area that needs to be
addressed, it is a thoroughly revamped T&D sector that
will bring results.
The Centrally-sponsored R-APDRP (Part A) project
that aims to baseline data for the implementation of
IT-enabled infrastructure in the power distribution
sector was launched with much delay in Bihar. The
project will cover 70 towns including capital city
Patna. However, it is unlikely that the project will be
anywhere close to completion by its scheduled date of
March 2012.
Experts feel that power availability in Bihar can also be
augmented through mega hydropower projects in Nepal
that borders the eastern state. Hydropower within the
state can play only a limited role as its main river (Kosi)
can only support medium-sized schemes. Renewable
energy, mainly solar and biomass, could make a small
contribution towards improving power availability in
off-grid areas.
Impact of tariff-based guidelines |
As already discussed, the Centre has stipulated that all power
purchases made after January 5, 2011, will need to be done
by the tariff-based competitive bidding route. This cut-off date
leaves a big question mark on the status of power purchase
agreements reached using the MoU route. This is not just for
Bihar but for all procurement agencies nationwide. Electrical
Monitor sought guidance from BSEB officials in this regard. In
response, a senior BSEB advisor explained in general terms,
that "power" as a subject is part of the Concurrent List. This
means that power is a Central as well as a state subject. In fact,
ensuring power availability is the primary responsibility of state
government. Central assistance should be sought only when
the state government is unable to provide for the state's power
requirement. "Reliance on Central government projects should
be more of an exception rather than rule," the BSEB advisor who
chose not to be quoted said.
Speaking on the fate of MoUs signed before January 5, 2011,
the official noted that it is up to individual state governments to
work out a policy framework to deal with these cases. Regarding
Bihar, he said that a policy to address these cases is being
formulated and should be formalized in the next two months.
The official reiterated that all power purchase agreements in
Bihar signed after the said cut-off date will be done on the tariffbased
route. It is likely, although the official did not confirm,
that for MoU-based private power projects that have recorded
progress on ground would be left untouched. However, the
state government might like to rework old MoUs where not
much progress has been made, and convert these projects
(power purchase agreements) into the tariff-based model.
|
Bihar needs to act really fast if it wants to avert the
impending power disaster. The new Nitish Kumar-led
government that came into power through a landslide
victory in November last year is already seen making a
positive difference to the road sector. The power sector
is next on the government's agenda. The new NDA-led
state government has an opportunity on hand to
transform the ongoing power crisis into an
opportunity to at least initiate radical transformation.
Bihar has spent long decades in darkness and socioeconomic
privation; a better standard of living for the
104 million people inhabiting India's third mostpopulated
state is long overdue.
Untitled Document
IPP Projects in Bihar under Case-2 |
Shell Company |
Location |
District |
Capacity |
Cost |
|
|
|
(MW) |
(`crore) |
Buxar Bijlee Company Pvt Ltd |
Chausa |
Buxar |
2x660 |
6,791 |
Lakhisarai Bijlee Company Pvt Ltd |
Kajara |
Lakhisarai |
2x660 |
6,810 |
Pirpainti Bijlee Company Pvt Ltd |
Pirpainti |
Bhagalpur |
2x660 |
6,820 |