COPY OF LETTER FROM UNION POWER MINISTER P.M. SAYEED

                                       

MINISTER OF POWER

                                                                                                GOVERNMENT OF INDIA

                                                                                                NEW DELHI – 110 001.

 

                                                                                                17^th May, 2005

                                                           P.M. SAYEED

 

To

Shri A.B. Bardhan,

Shri E. Balanandan and

Members of Trade Unions

 

Please refer to our discussions today and in meetings held earlier on 21^st December, 2004 and 2^nd May, 2005 regarding the implementation of the NCMP provision that:  

“The review of Electricity Act, 2003 will be undertaken in view of the concern    expressed by a number of States. The mandatory date of June 10, 2004 for unbundling and replacing the State Electricity Boards will be extended. The UPA Government also reiterates its commitment to an increased role for Private generation of power and more importantly power distribution”. 

On assuming office, one of the first decisions I  took was to agree to the requests of various State Governments for continuation of SEB for a period beyond 9^th June, 2004 under Section 172(a) of the Act of periods as requested by them. 

In the meeting held on 2^nd May, 2005, you had indicated that though a number of points for review of the Act had been suggested, after discussions in your own group, you had decided that you would be focusing on the following four issues which would need to be considered for the review in the Act. These issues were:

 a)       Unbundling of the SEBs;

b)      Central Government’s role in rural electrification to address the issue of urban-rural divide:

c)       The word “elimination of Cross-subsidy” would need to be reviewed; and

d)      Extension of date for reorganization of SEBs.

 After in-depth discussions, the following had been indicated by us:

 a)       Government would consider taking suitable steps to address the concerns regarding the provision of elimination of cross-subsidies in the Act though in the opinion of the Government this issue has already been adequately addressed in the Electricity Policy.

b)      With the launching of the Rajiv Gandhi Grameen Vidytikaran Yojana for fulfillment of the NCMP objectives of rural electrification and giving access to electricity to all the rural households within five years, we had for the  first time in the Central Government taken on direct responsibility for seeing that this basic need of rural India is fulfilled with 90% capital subsidy from the Central Government. The Government would also take care of the concerns regarding the misperceptions about the creation of an urban-rural divide in the Act.

c)       Regarding the provision of reorganisation of SEBs in the Act. I had indicated that we did not feel that there was a need for a review of the provisions in this regard.

d)      As far as extension of the date of reorganisation of SEBs beyond 9^th June, 2005, I had indicated that we would examine the matter in consultation with Law Ministry. 

Thus, we had reached consensus on all issues except the one relating to the reorganisation of SEBs. 

When we met today, again it was confirmed by you and other members that the four issues indicated earlier are the issues of concern. You indicated that while the Government had assured about the issues relating to rural electrification and elimination of cross-subsidy, the Government has yet to address the concern about the extension of date of reorganization of SEBs beyond 9^th June, 2005 and about the issue of reorganisation of the SEBs. 

After detailed discussions, we reached the following conclusions: 

1)      Government would consider taking suitable steps to address the concerns regarding the provision of elimination of cross-subsidies in the Act though in the opinion of the Government this issue has already been adequately addressed in the Electricity Policy. Suitable amendment in the Act would be considered.

2)      Centre’s role in the rural electrification activities would be suitably provided through an Amendment in the Act.

3)      In accordance with provision of Section 172(a) of the Electricity Act, the date shall be extended for a period of 6 months beyond 9^th June, 2005.

4)      During the next six months, the Government of India shall continue the process of review of the provisions related to reorganisation/restructuring of SEBs in the Electricity Act, 2003 based on the status and impact of its implementation so far.

SD/-

(P.M. SAYEED)