Wednesday, August 17, 2011

Things You Should Know

Many of you think that corruption is not the only thing plaguing our nation. You are right. But there is a good chance you are underestimating what corruption does to us. You know of the small Rs. 100 bribes you pay in your everyday life, or of the 2 lakh crore scams which make it to the headlines. There's more to it, and its hidden. You know the overall picture of these things, but not the grisly details. And they make a lot of difference.

I will explain that with an example. Do you know about Enron and and the Maharashtra State Electricity Board (MSEB)? Sure, you have heard the name. Have you heard this then, that the Government of Maharashtra pays them 1000 crores a year, more than 2.5 crores a day, even today, for nothing in return? Do you want to know why? Read on.

Enron is a US based natural gas company, which in 1993 started India's first private power project. The MSEB (was forced to) pay $30 billion for a 675+2015 MW Power Plant in Maharashtra. The gross profit earned by Enron for the project was a little more than $12  billions. Yes, dollars, in bllions. Adding 2685 MW causes an 18% increase in MSEB's capacity, and 30 billion USD is 70% of MSEB's revenue.

Later, the power that the Enron project produced was 2 times as costly as its nearest competitor, and 7 times as costly as the cheapest electricity available in Maharashtra. So it was decided to better pay Enron the compulsory fixed charges required to maintain and run the plant (as a part of the contract) than actually buy the electricity they produce. The fixed charges work out to be 1000 crore a year for the phase I, i.e. the 675 MW plant, alone. 1000 crores a year for the next 40 years. That could perhaps be the reason why Maharashtra, especially Vidarbha, faces such an acute shortage of electricity. They are paying but not getting any electricity in return.

When the deal's negotiations were in progress, being undertaken by the Congress-led State Government on Maharashtra, the BJP-Shiv Sena Opposition were accusing the Congress of having taken a 700 crore bribe. The Enron itself acknowledged that it had spent millions of dollar in 'educating' the politicians and bureaucrats involved in the deal. The opposition by BJP-Shivsena led to the annuling of the bill. So then, how and why was the bill passed, you ask? Later, the BJP-Shivsena alliance got elected for a government at the Centre, and this Government lasted for 13 days. On their last day, amidst all the last day drama, they re-ratified the national government's counter agreement for the deal. After a couple of months, the BJP-led government in the Maharashtra State signed the deal with the above mentioned terms.

In my hometown in Maharashtra, in summers, we get electricity only 12 hours a day. And the number is decreasing every year. So now, you can extend this information to other situations logically. You know most of them. You have bad roads because dishonest and inefficient construction firms bribe the government for contracts. Perhaps, in some years to come, we will realise what a hoax the Nuclear Deal was. But the American companies won't lose a penny. They have the Civic Liabilities Bill. The politicians who took the bribes would be retired and happy by then. We, the people, and our country will bleed out the expenses.

If you want to read more about this and a few more things, try Arundhati Roy's The Algebra of Infinite Justice. Most of the numbers and statistics are borrowed from there.

1 comment:

Venky said...

The numbers are astonishing..what the hell is happening in this country!!