Sucheta Dalal :Surpluses and shortages (20 October 2002)
Sucheta Dalal

Click here for FREE MEMBERSHIP to Moneylife Foundation which entitles you to:
• Access to information on investment issues

• Invitations to attend free workshops on financial literacy
• Grievance redressal


You are here: Home » Column Topics » Indian Express - Different Strokes » Surpluses and shortages (20 October 2002)
                       Previous           Next

Surpluses and shortages (20 October 2002)  

The threat of a stir by farmers led by opposition politicians only shows how every political formation in Maharashtra seem incapable of assessing its power requirements or telling people the true demand-supply position. Coincidentally, the scare scenario of heavy load shedding and blackouts again coincides with the efforts to get the Maharashtra State Electricity Board (MSEB) to buy power from Enron’s Dabhol project at a hefty and untenable Rs 2.80 per unit. Look at the scenario. Vinay Bansal, the MSEB chairman who seemed capable of turning around MSEB and negotiating hard on power tariffs was first hounded out. A former MSEB chairman is back in a key bureaucratic assignment.

The Shiv Sena controls the power ministry in Delhi and the BJP, which helped it to ‘re-negotiate’ and treble the Dabhol project showed great alacrity in leading the farmers’ agitation. The result: Maharashtra, which was almost self-sufficient in power until September, suddenly has an acute 30 per cent deficit and is forced to indulge in vigorous load shedding even in urban areas.

Yet, those who are blackening the faces of MSEB officials have not demanded that MSEB’s 500 MW Uran plant, which is lying idle for a year for want of gas, should be restarted at once. If Maharshtra has a peak Power demand of about 11000 MW (from 7 pm to 10 pm) and MSEB can supply upto 10300 MW of power (daytime demand is just 7500 MW) why is it facing a sudden shortage? Nobody has bothered to ask any questions or provide clear answers.

Engineering shortages

While worrying about MSEB’s power shortage, do consider this. In Gujarat the Consumer Education and Research Centre (CERC) filed litigation alleging that the Gujarat Electricity board had created a deliberate power shortage by closing down several power generating units for annual maintenance during the peak summer period.

This allowed it to buy electricity at extortionate tariffs from private companies by claiming serious shortages. Last week, Timothy Belden a top Enron energy trader pleaded guilty to fraud charges in a California federal court. He confessed to using schemes with colourful names—like Death Star and Fat Boy to create artificial shortages in California and driving up energy prices.

It led to a situation where there were brown outs and rolling blackouts in the State but earned him a $ 5 million salary in 2001. The US Attorney General Kevin Ryan said that charges against Belden answer the question that has long troubled California consumers: whether the energy crisis was spurred in part by criminal activity. The answer is a resounding yes”.

Can’t this happen here?

Finding Dalmia

When the Kolkata police launched a massive operation against Calcutta Stock Exchange (CSE) speculators involved in price ramping and off market trades causing enormous losses to investors, the Economic Offences Wing (EOW) of the Mumbai police immediately claimed that it wanted to question them too.

When the Kolkata police began to look for Dinesh Dalmia (of DSQ Software) who is the common link between these speculators, the Mumbai police said that it wanted him too. After all, several institutions and individuals have arrest warrants against him for payment defaults.

Yet, when Dalmia was at the ED on Friday, the Economic Offences Wing office was curiously reluctant to act despite prodding by some complainants. It is probably much easier to keep claiming that Dalmia is untraceable. We learn that the ED has summoned Dalmia again on Wednesday. Is this advance information adequate for the Mumbai police to question him this time?

Strange lethargy

On the one hand, the Securities and Exchange Board of India (Sebi) has gone to the Supreme Court to safeguard investors’ interest in Sterlite’s buyback and delisting attempt. Yet, when the delisting bid itself has been defeated by investors, who prevented Sterlite from buying back more than 72 per cent of the retail shareholding, Sebi seems strangely lethargic about re-starting trading.

Senior Sebi officials tell us that Sterlite has not been delisted, its trading has only been suspended by the BSE. In the meanwhile, the National Depository has also written to the BSE and National Stock Exchange about re-starting trading.

The Bombay Stock Exchange (on which Sterlite is officially listed) has asked Sebi whether trading can be resumed, but Sebi has still failed to give the green signal for over two weeks.

With Securities and Exchange Board of India officials claiming to work even on weekends to clear pending cases, investors cannot figure out where is the hitch in a simple decision

-- Sucheta Dalal