Reform power sector without privatisation: Padamjit Singh

V K Gupta

Padamjit Singh, Chairman, All India Power Engineers Federation, has strong reservation against privatisation of power sector in India. The power sector can't be reformed only by handing over generation, transmission and distribution to private companies.

INDIAN Indian Electricity Act 2003 has failed since the objective of achieving financial viability had not been attained. The very starting point of the 2003 Act was the statement of aims and objectives that state electricity board’s losses had become unmanageable, and there was a need for new legislation for restoring the financial health of the power sector for development and attracting investments.
It was expected that after unbundling of state electricity boards spread over different companies would act on the financial viability principle. However, this had not been achieved while the total losses of the state power utilities had increased to Rs 75,000 crore, and this is expected to double by 2014-15.

The experiment of privatising Delhi Discoms had failed completely and in their latest tariff petitions the Delhi Discoms of BSES (Reliance) had asked for tariff increase of upto 84 per cent, and in case of NDPL (Tata) the tariff increase of 50 per cent had been projected.

While the distribution sector is going to record increased financial losses, the policy of introducing distribution franchise in high revenue creamy areas would make the state Discoms even sicker financially. This privatisation policy amounts to privatization of profits and leaving the loss making areas, including rural areas, for the state Discoms. As a result, not only the financial health would become worse, the power supply to rural areas would also be seriously affected. Instead of trying to solve the problem of financial non-viability, the franchisee system would make the financial crisis worse.

Privatisation is being introduced in a big was by means of signing MOUs with private sector, which was against the tariff policy which prescribed competitive bidding. In Uttar Pradesh MOUs had been signed with private parties for 20000 MW capacity while in case of Punjab, MOUs for over 5000 MW had been signed. The MOUs would enable the independent power producers to setup power station with a help of the state and would sell their power at high cost. The Central Electricity Regulatory Commission (CERC) had advised Indian government that competitive bidding process must be adopted. Now, the government has filed an appeal in Supreme Court against an earlier order of the Appellate Tribunal, which had allowed a thermal project under MOU route. It is well known that projects awarded under MOU route are mostly with malafide intentions and such projects will supply costlier power to consumers to ensure maximum profit for the developer.