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EDITORIAL
PRESCRIPTION
FOR PRIVATISATION OF POWER SECTOR
The decades' experience
with the WB sponsored power Sector Reforms, the performance of power sector has
been dismal. The Enron the Orissa structures were adapted in the name of
resource mobilization but the funds almost in totality were arranged by Indian
financial institutions. The disastrous outcome was three-fold. Increase in power
costs and 50% slippage in generation capacity additions, the gap between the
average cost of supply and the average tariff realization has also increased
from 28 paisa in 1996 to 92 paisa in 2001 and the power sector crisis has
increased to unbearable levels. Most of the states namely U.P, Madhya Pradesh,
Delhi, Bihar, Karnataka, Gujarat and even Maharashtra are facing shortages in
this summer at the face of rapidly declining industrial consumptions.
Ignoring altogether the decades' experience of Power Sector Reforms at home
including the Enron fiasco and the telling experience of Californian power
shortages and price spikes due to market manipulations, the GOI has now
formulated the 10th power plan with a capacity addition of 46,939 MW and
appealed to the cooperation of industrialists for its success. That shows that
the government is still relying on private participation in the development of
power.
The privatisation of power sector would be appropriate only if the
supply costs could be maintained lower than those of the state entity. The
decades' experience is contrary. In Orissa privatized distribution company
(CESCO) had been indifferent to restore power supply in the villages dislocated
due to super cyclone in Nov. 1999. The aggregate tariff hike of 267 % imposed by
them led to reduction of power consumption in the agriculture sector from 7% to
3%. This gives indication that unaffordable power will ring alarm bells for the
food security of the nation.
Besides providing for the participation of
private operaters in the transmission sector the government has identified that
the Distribution Sector is the weakest link in the chain of power supply system
and has been given it the key focus area of Power Sector Reforms. Recently the
GOI introduced the scheme of "Accelerated Power Development Programme"(APDP)
which is to be utilized as the key instrument for streamlining Power
Distribution.
Electricity being in the concurrent list states hold the
key for implementing the Power Sector Reforms. The distribution sector is for
all practical purposes is in exclusive domain of the states. But the Central
government is insisting that the states to commit to undertake a time-bound
power sector reforms by executing MOU before the release of APDP funds. Thus in
effect states are being compelled to go by the dictum of the centre and to that
extent their freedom is curtailed. Many state governments have expressed their
reservation on the proposals.
Recently GOI had appointed Mr. R.V. Shahi
as Power Secretary a man inducted from the private sector to head Indian Power
Sector for wholesale privatisation with his expertise in private distribution
business, things are expected to gain momentum. He said that the centre would
create an enabling environment for attracting private players in the
distribution sector. The focus of thrust on Distribution sector reforms is to
pave the way for privatisation.
The Energy Minister has addressed a
letter dated 15th April 2002 to various political parties, the purpose of which
is to depoliticise power sector reforms and to forge an all party consensus on
power sector reforms. Accelerated Power Development Programme is stated to be
the key instrument for Power Distribution Reforms and 63 Distribution circles
are to be developed as centre of excellence through upgradation of distribution
network requiring an outlay of Rs. 50,000 crores during Xth Plan to deliver
quality power.
However as noted by the Power secretary that the
distribution sector reforms are being under taken to enable private sector
participation. Here again the basic question arise, that the power sector under
private agency will have only their main interest for earning profit and they
are not very much concerned about the national priorities of development which
is our experience of power sector reforms. Therefore the new ambitious plan of
the GOI where many good intentions are focused but the final result would be the
power costs will go sky high. The people will be put to unbearable burdens and
finally it will adversely affect the national development besides the adverse
impact on the employees.
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