Is Yogi Adityanath planning to hand over the power sector to private players?

Uttar Pradesh is heading towards a big power crisis as the threat of closure of state-run coal-fired thermal power plants looms large following tough environmental norms for curbing carbon emission enforced by the Ministry of Environment and Forests. Is the UP government paving the way for private sector to take over the power sector by using environmental laws as the handle?

The beginning has been made as the state government has decided to close down Unit 8 of Obra Thermal Power plant. The decision was taken in a state Cabinet meeting held in Lucknow on Wednesday evening. The Panki unit has also been closed for failure to meet the norms. The new norm entails installation of `Flue Gas Desulphurisation‘ (FGD) and `Selective Catalytic Reducer’ (SCR) in each unit of the thermal power plants.

Thermal plants in the state are Anpara A, Anpara B, (1,550 MW) Obra (188 MW), Panki (210 MW), Parichaa (1,140 MW) and Harduaganj (610 MW). Panki thermal power plant has already been closed down on January 1 this year.

There is fear that under the cover of environmental norms, the government intends to close down all thermal power plants in the public sector thus preparing ground for the entry of Independent Power Plants (IPP) from the private sector.

“After the closure of Panki thermal power plant, the next in line of fire is Anpara A and B thermal power plants. The cost of installing both anti-pollution equipment, the FGD and SCR is estimated to be Rs 2 crore per MW. The installed capacity of the two plants is 1,600 MW. Thus the estimated expenditure will be Rs 3,200 crore,’’ said Convener of Power Employees Joint Action Committee, Shailendra Dube.

Dube said that the present cost of constructing a thermal power plant of 1,600 MW capacity is over Rs 10,000 crore. He said that the first unit of 32 MW was scheduled to be closed on April 1 and the other unit six months later.

It was also decided that the next unit would be closed after the government announced its final decision to construct new 660 MW units in Panki.

The PEJAC convenor said that even as the matter of new 660 MW unit was before `Energy Task Force’ headed by the UP Chief Secretary and a final decision was yet to be taken, the government ordered the closure of both units of Panki thermal power plant.

There are reports that the government intends to close Anpara plants even as it was getting cheapest power at Rs 1.42 to 1.50 per unit. Anpara A plant is 27 years old and Anpara B is 22 years old. “The closure of both plants of Anpara will set the ball rolling for closure of UP Rajya Vidyut Utpadan Limited, the holding company owning all thermal power plants,” Dube said.

“Against an installed capacity of 3.38 lakh MW of power in the country, the peak load was only 1.60 lakh MW and rest of the generation capacity was lying idle. The IPPs with installed capacity of 45,000 MW were lying closed for lack of Power Purchase Agreements (PPA) with power distribution companies (DISCOMs) which are, barring in few cities, in the public sector hands across the country,” he pointed out.

The Union government is likely to bring the Indian Electricity Amendment Bill during the Budget session. Union minister of state for Power RK Singh has already said that there would be stringent provisions in the Bill and also stringent punishment for violation of PPA by DISCOMs.

The Central and the state governments under the `Power for All’ scheme has already announced to ensure 24 hour power supply to all households by March 2019. The minister had also said that the new law will impose penalties on DISCOMs in case of failure to provide uninterrupted power after March 2019, except due to technical reasons.

As soon as Indian Electricity (Amendment) Bill is passed by the Parliament, each DISCOM will have to sign PPA with IPP to the extent of power requirement for the entire year. In case of Lucknow, UP Madhyanachal Power Corporation will have to sign the PPA for at least 1,800 MW which is the daily requirement of Lucknow alone.