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Megawatt Thieves

Big industries no longer clamour for power, they simply steal it

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Megawatt Thieves
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Power sure corrupts, doesn’t matter if it’s electric power. Madhya Pradesh is a glaring example. What seven years ago was a power-surplus state has since been floundering in the labyrinths of perpetual shortage, all thanks to the immense greed of those who want more and more. The Madhya Pradesh State Electricity Board (MPSEB) now tots up losses of about Rs 1,200 crore every year.

This is an intriguing scenario, considering that the industrial sector which complains of power shortage has shown over 30 per cent decline in demand in the past five years. During the same period power production has gone up from 3,813 to 4,025 megawatts. The root of the crisis lies in line losses which have increased from 13 per cent to 20 per cent, undercutting the benefits of increased generation. These losses have been facilitated by theft and fraud by industries in connivance with MPSEB officials and politicians and a faulty captive power policy.

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An inspection drive has found that more than 70 per cent of the industrialists in the state steal electricity, causing direct and indirect losses of nearly Rs 500 crore a year. These thefts are generally added to the line-loss figures. And if one knows that power theft has been honed into a fine art by industrialists who have found loopholes to deprive the state, one can easily come to terms with the magnitude of MPSEB losses. There are some who steal directly from the transmission lines by hooking on to them, others produce their own captive power without permission, thus evading duty, and then there are those who produce power to sell it.

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The raids on industrial houses began after R.S. Julaniya was appointed to the board. First to be raided were rice mills which were illegally drawing power from high-tension lines. Sixty per cent of the 500-odd rice mills in the state, mainly in Chattisgarh, were found guilty of direct theft causing a revenue loss of Rs 124 crore in a year. Several, including one allegedly owned by cabinet minister K.K. Gupta, were sealed. A sum of Rs 60 crore has already been realised from these defaulters. Then came the steel-rolling mills. Some of these like IR Industries, Bamore and GRD Profiles, Indore, were found tapping power illegally. That’s not all-there are 33 others in this boomtown which use diesel generator (DG) sets without MPSEB clearance.

To check revenue losses caused by DG sets, Julaniya issued a circular to all MPSEB offices that all industries using such sets illegally should be checked. It naturally evoked no response from the engineers who were hand in glove with the defaulters. The first industry to be raided by the vigilance team was Himanshu Flour Mills near Bhopal. Two DGs were found to be running without permission and the factory was sealed. Raids all over the state revealed that a majority of heavy industries were using their own DG sets in contravention of law and these include names such as Eicher, Nahar Spinning Mills, National Steel and Steel Tubes India Limited. Eighteen MPSEB officials were suspended. firs of theft were also lodged against four industrialists.

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National Steel and Steel Tubes was found using 12 MW DG sets without even a primary electricity connection. Textile mill owner Ramesh Baheti now claims that his 100 per cent export-oriented textile unit was started only after the state government assured it of uninterrupted power supply. To an extent, the industrialists are not at fault. They are claiming immunity under a captive power circular issued by the then chairman in 1996. He had permitted the use of DG sets with a capacity of up to 5 MW provided the board was informed. It was withdrawn after 14 months.

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But why do industries prefer DG sets? It’s infinitely cheaper as cost of production is Rs 3.50 per unit against MPSEB tariff of Rs 4.70 per unit. A unit like Steel Tubes uses 35 lakh units every month, saving Rs 40 lakh. That apart, using DG sets ensures fluctuation-free power.

The MPSEB would, however, like to have its high-end customers back. Avers Julaniya: "We provide subsidised electricity to domestic consumers, farmers and municipal corporations. Only the industrial sector pays commercial rates and their demand has declined by almost 30 per cent." Since there is a five-year duty exemption on captive power, the government is losing revenue there as well. Industries which had not applied for an MPSEB power connection were also not paying minimum charges.

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The raids naturally led to a hue and cry. The state government has now given the industry a month to ‘regularise’ their connections. Says Julaniya: "It is not our intention to close down industries but at the same time, we want to evolve a position where the industry runs but not at the cost of MPSEB."

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