For the past twenty five years we have owned a small coconut farm in a village in Maharashtra. If this does not make me a full blooded Maratha, it does make me at least an honorary Maharashtrian in my neighbours' eyes. Bhiku, our gardner,looks after our wadi, and we have seen his children grow up nicely over the years. I have always taken a special interest in his eldest boy, and when the Enron power plant came up I confidently predicted thatPrashant would have a shining future. The main obstacle to our village's prosperity is perennial shortage of power, which inhibits commercial activity. Although Enron has made Maharashtra surplus, our village still does not get power on Fridays and brown-outs define our other days. Across the harbour is Mumbai where people get plenty of power, and entrepreneurs set up industries, call centres and software companies and create thousands of jobs every day. Who is robbing Prashant's future, especially when our state now has abundant electricity? Most people blame Enron, and they expend enormous amount of negative energy in blaming the foreign devil for selling expensive power. The truth is that Enron's power is not more expensive than similar new plants. Enron's power appears expensive because Maharashtra's electricity board (MSEB) buys only half the power that Enron can produce and this makes Enron inefficient. If Enron could run its plant full blast, then the cost of its power would be Rs. 4.02 per unit. Even a new thermal plant like NTPC's Kayankulam plant produces power at Rs. 4.50 per unit. Enron's notorious Rs. 7.80 tariff was a fluke for the month of July when MSEB bought only 30 per cent of Enron's power. The rise in oil prices and the rupee's depreciation have not helped, but the main problem is MSEB's inability to buy enough power from Enron. If you buy a monthly train pass for Rs. 100 and use it only once then your journey costs you Rs. 100. But if you use it 100 times then each journey costs Re 1. If you create a fixed asset you should use it as much as possible. Maharashtra's electricity board behaves in this irrational way because it is bankrupt. It doesn't have money to buy Enron's power because it sells power below its cost. If a mango seller buys mangoes for one rupee and sells them for 50 paise, she too becomes bankrupt. MSEB has 13 million customers and of these 11.8 million get power below cost. 9 out of 10 Maharashtrians pay 42 paise per unit and 1 out of 10 pays Rs. 5.40. In addition, many of its customers steal power. Hence MSEB loses Rs. 5 crore per day. Mumbai, however, has plenty of power because MSEB does not distribute it. Professional private companies like BSES do, and they ensure that their bills are collected and they don't let anyone steal their power. Hence, Transmission and Distribution losses are only 9 per cent in Mumbai while they are 31 per cent in Maharashtra. The truth is that if some people have to pay 13 times more than others then no amount of policing by MSEB will help. The answer, of course, is to charge customers what it costs to produce electricity. This is easier said because no politician has the courage to raise tariffs to farmers and risk losing his assembly seat at the next election. MSEB must also learn from Mumbai and privatise power distribution. The crux of the problem facing Enron and every other independent power producer in India is that they have the freedom to generate power but they do not have the freedom to sell it. In a power starved country we should encourage Enron and all our power plants to produce as much power as possible (which will lower production costs). Put this power on the national grid, and open the trading of power to private entrepreneurs. Private companies will bid for power from generators and sell it directly to consumers. Those who want high quality power, without interruption will be willing to pay more. So will customers who live in power scarce areas. Consumers will be able to choose between different suppliers and from a menu of prices. During peak hours rates will rise, but eventually when supply exceeds demand prices will decline, as they did when cement was liberalised. So Prashant, don't blame Enron for spoiling your future. Blame Maharashtra's ugly politicians and the incompetent MSEB. In the next election vote for the candidate who promises to make everyone pay the real cost of power, privatise distribution, and sack MSEB linesmen who steal power. Remember, only insecure people blame foreigners for their own troubles.

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