India states may face blackout as Enron unit idles

Friday September 28, 1:59 AM EDT

By Sriram Ramakrishnan

BOMBAY, Sept 28 (Reuters) - Five Indian states, including two of the most prosperous, face the prospect of a blackout even as U.S. energy giant Enron Corp's (ENE) plant on the west coast lies idle, a senior government official warned on Friday.

"There is every chance of a total grid collapse in the western region, which means there will be no electricity anywhere -- in hospitals, railway tracks, offices," the official told Reuters.

India's western region, comprising the five states of Maharashtra, Goa, Gujarat, Madhya Pradesh and Chattisgarh, consumes an average of around 25,000 MW of electricity per day, the most in the country.

Maharashtra and Gujarat are two of India's most prosperous states and Bombay, the capital of Maharashtra, is the country's financial capital. Several key factories of multinational companies such as the BG Group Plc (BG), Royal Dutch Shell (SHEL) (RD) and Hindustan Lever Ltd (HLL) are based there.

In January this year, the northern grid buckled, plunging most of northern India, including the capital New Delhi, into darkness for hours. The official fears a similar collapse could occur in the western region.

Patchy rains in some parts of the western region and maintenance shutdowns by thermal plants have affected supplies, the official told Reuters.

India's western region has a capacity of 30,548 MW a day of which about 3,000 MW comes from hydro-electric power plants.

During peak hours the shortfall is about an average 4,500 MW, and about 2,500 MW during off-peak hours, the official said.

"Rainfall this year has been low, particularly in Gujarat and Madhya Pradesh," he said. "Availability is down as hydro reservoirs have not been able to accumulate water."

About 6,000 MW of thermal capacity has also been hit as these plants are shut for annual maintenance. This has resulted in a generation of 19,000 MW, versus a demand of over 22,000 MW, the official said.

CRISIS SECTOR

"We are in crisis," he said. "Load-shedding to reduce demand has to be done on an hourly basis." Load shedding is cutting off electricity for short periods in a day, to prevent excess demand from straining the grid.

A blackout, the official said, would disrupt industrial production and normal services. It would also turn the spotlight on the country's beleaguered power sector, dominated by loss-making state utilities.

It could also hasten efforts to end a dispute between Dabhol Power Company and the Maharastra State Electricity Board (MSEB) over payment defaults and high tariffs.

Enron's 740 MW plant, built by its Indian unit Dabhol Power Company, has been lying idle after its sole buyer, a loss-making state utility, stopped buying power in June.

The official said Dabhol's power would be welcome now, but said they have not proposed to MSEB that it resume purchases from the plant.

Many Indian utilities have little money to invest in new capacity or to buy power from private units, thereby choking private investment. South Korea's Daewoo's Corp, Electricite de France [EDF.UL] and Cogentrix of the United States have already exited the country.

Demand is growing at the same time. Government estimates show India needs to add around 100,000 MW per day by 2012, but with stagnant capacity, most grids are under pressure during times of peak demand, the official said.

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-- Martin Thompson (mthom1927@aol.com), September 28, 2001