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VOICE OF ELECTRICITY WORKERS
THE POWER SECTOR MESS
- E. BALANANDAN
The Vajpayee government at the
Centre and many state governments under its dictates have taken various measures
for the speedy privatisation of the country's power sector. The result of which
needs no elaboration since all types of consumers are very much aware of it
through their own experience -- the unbearable tariff hikes, erratic power
supply, stagnation in development etc. The much tom-tomed legal framework
created through the Electricity Act, 2003 did not improve the situation, but
created new problems since the basic objective of it was to privatise the
industry and to transfer the time tested system for profit hunting.
Let us see the experience of a few states. More or less every state, except a
few like West Bengal, moved to the privatisation mode due to economic compulsion
and faulty perceptions for the sake of brevity.
Orissa was projected as a `model' and the government spent Rs. 305 crores to the
consultant for formulating the proposals for privatisation and capacity
building. They have restructured the State Electricity Board separating
generation, transmission and distribution. Entrusted generation and distribution
to private companies including the foreign company. While keeping the
transmission under State ownership. This experiment failed miserably. Power
rates increased twice or thrice. Since the companies could not cop up with the
financial transactions and failed to continue their operation, they quit the
Seean like the notorious Enron Company from Maharashtra.
In Delhi and Karnataka, different methods were trying. In Delhi, distribution
system was privatised straightaway. The proposal for privatisation was made by a
consultant company charging Rs. 3.5 crores. However, the experience shows that
while the private sector companies without significant investment were making
money by increasing the power rates from the consumers besides getting much
concessions from the government. The people are the sufferers due to exorbitant
power hikes. The employees of the system were also suffered maximum by loss of
employment. Over 6,000 workers lost employment besides reduction in emoluments.
For their pensionary benefits, they are driven pillar to post -- the government
and the companies.
In Karnataka, they are trying to unbundling and corporatisation of the
electricity board by creating Karnataka Power Transmission Corporation and four
to five distribution companies. But they did not privatise.
This they have done to get the promised World Bank loan. However, they are also
out to privatise the power sector and appointed a consultant to submit
proposals.
In Andhra Pradesh, they have entrusted some public sector undertakings to submit
proposals for privatisation. However, the reforms resorted to in Andhra Pradesh
too did not help to improve the power system. Only the power rates went up
considerably and the government were forced to continue heavy financial
subsidies.
We need not go into the experience of other states. Suffice to state that both
the so-called aims of privatisation of improving efficiency and building
additional capacity are failed miserably. The projection of 7121 MW in the Tenth
Plan in the private sector seems impossible. The private sector now moved to new
conditions for investment demanding complete freedom to decide the power rates
and for the system management with least interference from the government or
regulatory commission.
The Electricity Act, 2003 ignored even the unanimous recommendations of the
parliamentary standing committee besides the sound advise from the technical
persons and workers well-connected with the industry. The deficiencies of this
legislation is coming to focus on various vital issues. The provisions made for
delicensing generation, multiple players in the same territory, open access and
licensee in trading did not start working and each of these will create many
problems.
Hitherto, the responsibility of developing transmission and distribution were
handled by the Electricity Board or by Power Grid Corporation, a public sector
undertaking. When the delicensing coming to force, their interest will be to get
maximum profit and will not put money for strengthening the transmission and
distribution network. This will create big problems in the system like we have
seen in United States and Canada on August 15 and in London on August 28 are
telling examples.
The open access to more than one licensee will disturb the grid discipline and
create chaos.
By creating consumers association and consumer cooperatives, the consumers who
use this open access facility can escape from cross subsidy cess and if it is
developed, the cross subsidy system will not work. According to the latest World
Bank report, those less developed and developing countries which are facing
resource crunch where power system working profitably, by allowing more
operators in the field for distribution ad transmission will be unscientific and
create problems in the power sector.
Tariff Policy
The new draft tariff policy published by the Power Ministry has been opposed by
all the southern states except Kerala. Karnataka, Tamilnadu, Andhra Pradesh,
Maharashtra, Orissa, Madhya Pradesh, West Bengal, Rajasthan, Punjab are the
states expressed their opposition. The CERC and FOIR were also expressed their
opposition. The following were their main objections.
1. Without declaring the policy of power sector, it has gone into the details of
the micro management.
2. This is an encroachment into the Authorities of the Regulator.
3. The imposition of a single operating norms for the central state and private
sector is wrong.
4. The proposition that instead of T & D losses inclusion of total trade and
transmission losses, the CERC do not agree with it.
5. The proposal for 16% profit before tax.
6. The power rate will be increased if the electricity boards or its successors
are allowed to deduct depreciation on the basis of 1956 Companies Act.
7. The proposed fixed charge by the CERC on the basis of 80% power availability
for Thermal Projects to be reduced to 75% is objectionable.
8. The draft proposes the amount of surcharge is an infringement into the
regulators powers and it is against Electricity Act, 2003.
There is also serious differences developed between the Power Ministry and the
National Thermal Power Corporation which produces 15 per cent of the total power
in India and this is one of the best functioning public sector outfit. The
government wants this to be divided to five companies in order to facilitate
their plan of privatisation which has also been opposed by the NTPC management.
In totality, the government is still pursuing the policy of privatisation which
has brought the power sector in complete disarray. This is the contribution of
Vajpayee government.
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