Alternate Power Policy-Success story in Kerala during 1996-2001

Voice of Electricity Workers

April- June 2001

Alternate Power Policy-Success story in Kerala during 1996-2001

K.R. Unnithan, General Secretary, K.S.E.B.Officers’ Association

Government of Kerala declared a comprehensive Energy policy in 1998 to instill a sense of direction and to provide a new thrust to power sector in the State. Main focus was on solutions to the prevalent crisis in the state on short-term perspective and on an agenda with guideline for growth and development of power sector in a long horizon. State at that time was languishing in acute power shortages as reflected in heavy power cuts and routine load shedding not to say of severe voltage deficiency and interruptions. This policy was evolved after extensive deliberations at different levels involving all stakeholders and beneficiaries. More over this policy was intended as a challenging alternative to the power sector reforms initiated in the country during1991 in line with new economic policies of Government of India.

In a short span of two years of introduction of the Policy State made significant strides in alleviating the impacts of power shortages. Kerala moved into the list of very few States in the country without power cuts. Lifting of load shedding in early November this year is a landmark in power sector. Generation segment achieved a phenomenal addition of 73% capacity over last five years (1102MW) against the national average of less than 20%. Transmission network is being strengthened, commissioning 48 substations of different voltage levels, to address low voltage problem and unsatisfactory levels of interruptions. When the ongoing projects in transmission system that includes over 142 substations and associated lines are commissioned, grid may have achieved targeted level of efficiency. Focus in distribution segment is to improve services by providing quality power at proper voltage and reliability. New connections are expedited reducing wait time from over five years to under two years. This is after providing 17 lakhs connections during the last 5 years. Another ambitious scheme of providing one lakh electric connections to the low-income group below poverty line is well under way. In spite of all sorts of financial constraints tariff in the state is maintained at socially affordable levels, at an average of Rs.1.87, still the lowest among other states in India. This strategy even against financial deficits reflects State’s commitment to support the much-needed development in industrial and agricultural sectors.

But the environment of power sector in India is getting difficult for progressive and socially acceptable strategies. Union Government through policies of privatization, liberalization and globalization is putting hurdles before states not in support of the new central policy. State Government is gearing up the system to take on the challenge by enhancing efficiency and relevance of Electricity Board in the framework of new State Policy tailor made for the situation. Well designed training is being organized to cover all employees aimed at improving competencies and skills. This paved the way for emergence of a new work culture in Board that is conducive to meet the requirements of Board as well as society. Commissioning of Kozhikode Thermal Station ahead of schedule and below budgets is a silver lining and a shining example in the new scheme of things. Structural changes in line with modern management trends are also envisaged and the process of reorganizing Board into three profit centres is on track.. Underlying objective of this change is to convert Board into an efficient, viable and consumer friendly organization as Board in public sector.

In last two decades power, which was perceived as a basic service segment in infrastructure, was switched over to the segment of

profit-oriented commodity segment. This paradigm shift was initiated in developed countries at the behest of multinational giants who visualized a new pasture for profits in power sector. Developing countries had retained this sector of vital importance in public ownership to ensure overall development of State in socially acceptable orientations. But the multinationals particularly in the business of Electrical and allied machinery viewed this as an obstacle in the way. The new paradigm shift was a prerequisite for their operations. These multinationals in association with international institutions such as IMF, IBRD, WTO etc. ventured upon a planned initiative to influence policy of governance in developing countries. Many countries like India were by the time in the list of IMF and World Bank, slowly but steadily slipping into debt-traps. Policy of resource mobilization in such countries was lopsided and inclined towards ‘Haves’ at the cost of ‘Have-nots”. This aggravated the economic scenario and reform formulae of above institutions were thrust upon the countries in the form of liberalization, privatization and globalization.

In spite of this multi-pronged global initiatives only few countries like USA, Britain, Peru etc. went for total unbundling and privatization of the sector. Most of the countries opted to keep the sector in public ownership after structural changes. However reaction in India was mixed. Some eight States disbanded Boards and formed corporations for different segments of generation, transmission and distribution. Orisa was taking the lead. Another set of six states have initiated steps on similar lines. Distribution sector was privatized in Orissa and state of Andhra Pradesh is in the process. And now a comprehensive statute ‘Electricity Bill 2001’ to replace all current acts and rules in Electricity is on the anvil. Main thrust in the proposed Bill is for privatization including segment of transmission. New proposed statute calls upon States to set up regulatory commissions who shall have powers to reject even policy directions of State Governments. Experience of states where such commissions were constituted is not positive with high increase in consumer tariffs leading to tariff shocks that invited public anger. In general, provisions in the Bill are a blow to the constitutional rights of States and may jeopardize centre-state relations.

Reforms in power sector oriented towards liberalization, privatization and globalization were introduced with tall claims of faster developments and capacity additions. But the outcome of subsequent five year plans was a colossal failure. In capacity addition, short fall in 8^th plan was 41% while the expected slippage in 9th plan period is over 36% even against downsized targets.

In the above scenario in global and national scenes, Kerala opted for a unique path and came out with policy in 98 and achieved commendable developments in last two years as explained above.

. This policy affirms our support to the public sector and also our commitment to the welfare of poorer sections of society. Consequently, our policy states:

 State Electricity Board shall remain in the public Sector.

 .Restructuring of the Electricity Board by reorganizing the working of the Board into three Profit Centres for generation, transmission, and distribution. A corporate service unit will support these profit centres. Overall management will remain with the Board.

 Evolve a system of tariff fixation based on scientific norms and with a long-term perspective which will be rational and based on generation – consumption patterns.

 Private participation is allowed to a limited extent in generation sector. This is to tide over the power crisis and the financial resource constraints in the present scenario.

 A Tariff Regulatory Commission is proposed.

 Measures to reduce T & D losses, targeted to achieve ideal HT - LT ratio of 1: 1.

 The subsidies on electricity offered by different departments will be made available direct to the consumers.

 High priority would be accorded for hydel generation.

Task forces were constituted to examine the existing structure and to recommend the changes. The task forces were constituted with fair representation of the employees of the Board. This participatory approach has ensured almost total acceptance of the reforms in the Board. The milestones in the progress map are on schedule as on this day. The ultimate objectives of the reforms are operational efficiency, financial viability and consumer friendly services. But may I assert that we differ on the path of reforms now being advocated by the Union Government and some of the state governments like Orisa. The present LDF Government is committed to the establishment of a Socialist society that was visualized by our freedom fighters as enshrined in our Constitution. In this context it will be appropriate on my part to quote a few lines from the speech of the Hon. Minister for Electricity, Kerala on 3^rd March at New Delhi in the Power Minister’s conference. He said “ We would like the means of production of this valuable commodity, namely energy, in the hands of State, in consideration of National security aspects and services to the poor rural population. We do not subscribe to the philosophy of entrusting the control of the production and distribution of this commodity entirely to the private sector. In fact, we are of the opinion that this could jeoparadise other interests of the State. It can be very well visualized that Orissa model reforms which was preached as a panacea for all ills of power sector have been miserably failed. Other States, which followed the suit, are also facing the same destiny. We had also seen what has happened in California, the dreamland of the apostles of World Bank and IMF dictated Power Sector reforms, during last summer. We do not, therefore, subscribe to the present policies of Government of India for privatisation and unbundling of the Electricity Boards and Bill 2000, the legal framework with this intention.

My Government does not support the move of Government of India to introduce a fresh legislation on reforms. We apprehend that such legislation would infringe up on the rights of the States to legislate on matters, which are within their jurisdiction under our federal structure.

We are of the firm view that the decision on reforms and the path of reforms should be left entirely to the wisdom of State governments.”

While implementing this alternate policy the Government was very keen in the welfare of the employees and unemployed. More than 750 places of officers and 1500 places of employees were created for providing better services to the public and for completing the developmental activities in time. The Government also directed the Board to fill up all the existing vacancies. As a result, more than 8000 educated unemployed youth got appointed in our Electricity Board. A bipartite settlement was reached between the recognized unions and management on wage revision in which workmen in the pay range of workmen is getting an average increase of Rs. 800/- .A handsome salary revision was also ordered to officers by virtue of which workmen and officers in the pay range of officers will get an average increase of Rs.2500/-.

Gallop polls / referendum conducted by independent agencies show that the quality of service rendered by KSEB has been increased considerably during the last 5 years.

Scams unveiled by ‘Tehelka’ are only the tip of the iceberg. BALCO deal and all other ‘selling out’ of public sector in the LPG policy pursued by the former and the present government at the center is with this ulterior motive of huge ‘kick backs’. They are betraying the hard earned country’s freedom. Patriotic forces should unite and launch protracted and stiff struggle against the LPG policies to save the country from a colossal disaster. The success story of the ‘Alternate power policy’ in Kerala is a powerful source of inspiration.


Home \| Voice of Electricity workers \| Press Release \| Resolutions \| Feedback \| About Us