Economy
Maharashtra government policy: Rob captive power plants to pay SMEs and win kudos
That is the mantra of the Maharashtra government. Several small and medium enterprises (SMEs) in the state are in dire straits and closing their units due to unaffordable electricity tariffs of about Rs7 to Rs10 per unit. However, the government does not want such units to be closed due to high power tariffs. So, how can it reduce their power tariff? By subsidising the SMEs. But it does not have the money to pay such subsidies. So, it is about to increase cess on all captive power plants, say informed sources. 
 
Says an industrialist privy to this: "They (govt) want the power tariff for SMEs to be fixed at around Rs5.50 by providing a subsidy of Rs2 per unit. The total subsidy amount comes to about Rs1,100 crore. The government does not have this money. So they (govt) want to increase cess on captive power plants to Rs1.50 from 30 paise at present. This will help them garner around Rs950 crore. Rest they will manage from other sources and give subsidy of Rs1,100 crore to SMEs for electricity." 
 
This atrocious move comes at a time when the demand from industry bodies is for providing incentives to captive power plants and for the removal of the cess altogether. Instead of imposing the cess on the generation of captive power, the government should focus on reducing transmission and distribution (T&D) losses that are hampering power sector, the industry bodies had said.
 
Subdued economic activity has led to lower power demand from industrial consumers, which has led the state electricity boards (SEBs) to shed load to the residential and agricultural consumers. However, this has not brought down the tariffs because a large part of the input costs is fixed in nature. Besides, there is enormous padding and corruption involved in capital costs of power plants, which has kept power tariffs really high. Costs of fuel like coal too are not going down. 
 
The power sector in India has always been a highly-regulated sector. While the state-run units are run in an operationally inefficient manner, all kinds of dubious entities in the private sector have been allowed to start power projects. This has created a huge mess of high cost plants, unfinished projects and large bad debts for banks – eventually keeping tariff high and demand low. The state-run generator NTPC on Monday posted a 7.73% drop in its standalone net profit for the fourth quarter ended March at Rs2,716.41 crore owing to low demand from state distribution companies (discoms). NTPC had posted a net profit of Rs2,944.03 crore in the corresponding quarter of last year, the company said in a stock exchange filing. "The standalone net profit saw a dip this quarter due to lower demand from discoms," a senior company official told reporters. Many discoms' power purchase abilities are under stress from huge accumulated debts. In this scenario, the Maharashtra government is making things even messier by Robbing Peter to Pay Paul strategy.
 

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COMMENTS

suneel kumar gupta

12 months ago

I fully agree with the fact maximum efficiency improvement is needed in distribution. Power theft is majorly done by political parties who steal power in all their rallies. I ve often seen them picking power directly frm poles. But will bell the cat. Then state govt. buys power, sells cash & doesn't pay power companies. Things will not change just by fire fighting.

Ganesh Iyer

12 months ago

In Maharashtra at several inner villages there is open power tapping and misuse. Even in cities like mumbai big corporates were caught tampering electricity meters. Whilst electricity theft is a clear No Bail case of registering offence there is no vigilance oversuch thefts. With political connections no action is also initiated. It is ttherefore best to improve electricity in mahatashtra the power sector should be handed over to another state to manage independently and judiciously and make people pay for what they use, make electricity economical, give 365-24x7 electricity supply if not possible then send officials to gujarat to learn some examples. Even Navi Mumbai is electricity deficit huge developments but no power. Make vigilance register power thefts be it road side romeo festivals or political shows theft is theft.

PSU banks credit profile under risk due to heavy losses: Fitch
The credit profiles of India's public sector banks are under pressure as heavy losses have been reported in the last two consecutive quarters, weakening their core capital adequacy, says Fitch Ratings. 
 
In a report, the ratings agency says, "Core capital ratios for many public-sector banks are close to or below the Basel III financial year 2019 (FY19) minimum regulatory requirement of 8%, and the sector is unlikely to build capital through internal capital generation in light of the dim earnings outlook - at least over the next two years due to the ongoing provisioning pressure. The cumulative second half of FY16 losses at Indian public-sector banks were more than double the government's capital injection in FY16, and had eroded nearly 15% of capital as of FYE15. This has heightened the sector's need for additional external capital." 
 
Fitch says since long it has assessed India's banking system on a stressed-asset basis - rather than narrowly defined non-performing loans (NPLs) - to factor in the risks of significant under-provisioning and weak capital and the recent losses at public-sector banks support this approach.
 
The ratings agency is likely to reassess its $140 billion estimated capital need for the system under Basel III, of which public-sector banks will continue to account for the dominant share. The recent steps by Reserve Bank of India (RBI) to allow part of the revaluation reserves into core equity has helped counter some of the pressure, but is not enough - keeping in mind the higher capital requirements, it added.
 
According to Fitch, there are a few options for private-sector capital for now. "Public-sector banks' access to capital markets is likely to remain weak. There is little additional Tier 1 capital issuance either (around $500 million since January). The government remains the most important source of new capital for the sector. The sector's requirement for new capital needs to be addressed to meaningfully kick-start credit growth to lend support to the economy," it said.
 
The central bank's asset-quality review is a positive, as it has compelled banks to reclassify standard or performing restructured loans as NPLs, leading to higher loan provisioning, which triggered losses at many public banks. Small- and mid-sized public-sector banks were always the most at risk, but these results indicate that the standalone ratings of certain large banks may also be vulnerable, Fitch added.
 
The RBI review also highlights higher capital risks for government banks with an average net NPL to equity ratio at around 70% versus 8% at private banks. The impact on private-sector banks was relatively limited, as hidden problem loans were lesser from the start - while better credit growth and diversified income streams also helped offset the decline in profit from higher loan provisions.
 
"India's new Insolvency and Bankruptcy Code may significantly improve resolution timeframes if implementation is both timely and effective. The government's intention is encouraging, according to recent press reports, but it will take time to see whether the new code can help resolve the current NPL stock, especially since the broader economy remains relatively uncertain. The Reserve Bank of India's recent discussion paper on limiting banking sector exposure to individual corporate borrowers, when implemented, could further reduce systemic risk by limiting concentration risk to large corporates," the ratings agency concluded.
 

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Don't treat your garbage as garbage, but as a resource
An interaction between citizens and municipal officers of G-North and G-South ward led to a several interesting suggestions and thoughts on how citizens can collaborate in making Mumbai clean and green. The crux of it, however, was the need for greater engagement by citizens and a willingness to work together with the authorities, instead of indulging in a one-sided blame game.  The session started with a presentation and case study on what has worked in one particular ward. 
 
Kunti Oza, a well-known activist, who has been working on the issue of solid waste management for over 25 years made a presentation about how A-Ward, which includes the business district of Nariman point has made significant progress in working together with citizens, educational institutions and business houses to create awareness against litter and in favour of segregation and disposal of waste. She formed the Clean Bombay Foundation in 1992 (subsequently renamed as Clean Mumbai Foundation), which has been actively involved in making Mumbai a clean place. Officials from Brihanmumbai Municipal Corp (BMC) or Municipal Corp of Greater Mumbai (MCGM), Sudhakar Nanote, Asst. Engineer (SWM) and Shashank Thakur, SE (SWM) G-South Ward were also present during the session.
 
Well-known activist Ashok Ravat set the tone for the session introducing the issue of waste management, and highlighting the importance of segregating waste. Ms Oza enumerated the activities of Clean Mumbai Foundation. She said, “The problem is with education (relating to waste management).”
 
She added that instilling the right values in children at young age could go a long way in solving the problem of waste management. Educating people could go a long way in highlighting that garbage is a manmade problem, she went on to educate the audience on different types of waste. Stating the importance of treating garbage as a resource, she advised the audience to convert their garbage into compost.
 
Every person can do his bit by helping in his own way. In one year, a family of four can ensure that 120 kg of waste is recycled just through segregation. A building of 20 apartments can ensure that 2.4 tons is recycled in a year! She said that it was important to generate awareness about global warming.
 
Shaivi Shah, an intern with Moneylife Foundation, gave a brief pictorial presentation highlighting the contrast in cleanliness levels at different places in G-South and G-North ward. This led to an interaction with Assistant Engineers of G-North and G South Ward on how the community can participate in keeping the city clean. 
 

Mr Shashank Thakur, SE (SWM) from the MCGM (Municipal Corporation of Greater Mumbai) explained that there are three types of waste – dry, wet and domestic hazardous waste. He added that the willingness of people to do something actively for waste is less. Composting is one of the methods to recycle waste. There are different methods of composting. Pot composting (aerobic method), vermicomposting and Bokashi method are some of the methods of composting. For instance, in aerobic method, you put your dry and wet waste in different containers. Once the wet waste container is full, put its contents into the first compost pot. You can then add dried leaves of the same quantity as the waste. You can then add the semi-composted material, buttermilk or cow dung to start off the decomposition process. Turn the pile around every other day. Once full, the pot has to be kept open for 30-45 days. After two months, the waste will turn into rich compost that can be used or sold as manure. Though there are different methods of composting, Mr Thakur said, “Whatever way you like (it), do it.”
 
Plastic recycling is also extremely critical as it is non-biodegradable. A technique known as Pyrolysis process can convert plastic into a useful fuel. Using this technique, any type of plastic waste can be broken down into smaller molecules. The output derived from the process is known as bio fuel. Similarly, heat compression and thermal depolymerisation techniques are used in certain countries
 
The speakers explained the operational aspects of workings of waste management by the authorities. The speakers stated that change in culture takes time, but it will definitely happen.
 
Mr Thakur stated, “Don't believe that things can't change. Be optimistic. Our future is bright.”
 
An interactive Q&A session followed where questions on a number of issues such as expandable polystyrene (EPS) or thermocol waste, which is not biodegradable, and what could be done to reduce such waste were answered. On the question of what the citizens could do to reduce the problem of waste, Mr Thakur reiterated the importance segregation of waste, which is also the key to bring down cost of transportation etc. 
 
But again, the MCGM officials expressed their willingness to work with people and urged citizens of G-North and G-South to create Advanced Locality Management (ALMs) that could work with them and be suitably empowered to keep tabs on cleanliness.  There was also some discussion on incentivising housing societies, who create space for segregation and are able to dispose all their waste in-house. There are a couple of societies already doing this work, the best known of these is Marathon Era Cooperative Housing Society in Lower Parel, Mumbai, which treats over 300 kgs of garbage generated everyday in-house and does not even need garbage truck going to the society. He said this can be replicated by many of the bigger societies in Mumbai as well.
 

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COMMENTS

Jyoti Dua

12 months ago

I appreciate Moneylife publication for publishing such news. I also appreciate MCGM officials and Ms Kunti from Clean Mumbai Foundation for interacting with citizen. The citizen can play a vital role in cutting down the transportable waste. There is need to spread the awareness about segregation of waste and converting it into manure at the source. MCGM should take active part in awareness mission and associate NGOs, Senior Citizen, office bearer of housing societies. Many individual wish to take active part in converting waste into compost. However, there is need to educate them about the process.

Meenal Mamdani

12 months ago

Residents of Raghav Wadi, near French Bridge, obtained 2 separate containers for wet and dry waste. However after segregating the waste, the municipal truck that comes to collect the waste, mixed it all together in the truck. This is very disheartening. If the corporation wants the citizens to separate the waste at source, at least it can send 2 separate trucks to collect the separated waste.

REPLY

Shrikant Dattatraya Sahasrabuddhe

In Reply to Meenal Mamdani 12 months ago

BMC must educate its ground level staff first.Also they need to have concrete plans for end use of collected garbage.

Shrikant Dattatraya Sahasrabuddhe

In Reply to Meenal Mamdani 12 months ago

BMC must educate its ground level staff first.Also they need to have concrete plans for end use of collected garbage.

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