All work connected with power generation and supply has been a State monopoly in most parts of
The Central Electricity Act, enacted by Parliament in 2003, required all State governments to establish separate companies to undertake generation, transmission and distribution of power. It set June 9, 2004 as the deadline for unbundling of the electricity boards.
In many States, organizations of officers and other employees opposed trifurcation. This made it difficult for the governments to move speedily in the matter. They sought more time from the Centre comply with the law.
The Centre obliged, and most of the States eventually fell in line.
In Kerala, the Congress-led United Democratic Front was in office when the Central law came into force. It sought and obtained four extensions of the deadline. It left office without taking any steps to comply with the law.
The Left Democratic Front government, which came to power in 2006, adopted the same strategy as the UDF. It, too, sought and obtained four extensions.
The Communist Party of India (Marxist), which heads the LDF, is opposed to privatisation of KSEB on ideological grounds. So is the CPI. Although the Congress does not share their ideological compulsions, it too does not favour changes of the kind envisaged by the Central law.
KSEB has a plethora of trade unions and associations, all which are under the control of political parties. The Congress-led unions shared the Left unions, enthusiasm to retain KSEB in the present form.
When Central minister Sushil Kumar Shinde granted State minister AK Balan’s fourth request for more time to comply with the law six months ago, he made it clear that there would be no more extension. However, the State did not take the warning seriously.
A few days ago the State government sought another extension. The Centre turned down the request and asked it to comply with the law by September 24. Peeved by the Centre’s action, the State Cabinet decided on a formal protest.
The State’s failure to fall in line even after the deadline was extended eight times exposes it to the possibility of denial of access to power from outside to meet the shortfall in its requirements.
KSEB has 9.16 million consumers, of whom 7.2 million are domestic consumers. Commercial consumers number 1.36 million. There are fewer than 449,000 agricultural consumers and 131,000 industrial consumers.
It has an installed capacity of 2087.23 MW of power. It gets 570.016 MW from the National Thermal Power Corporation. Two private sector firms also make small contributions to the grid. Since local production accounts for only half of the State’s current requirements, lack of access to outside sources can precipitate a major crisis.
The Centre believes reforms in the power sector are necessary to technical and commercial efficiency. It also feels fresh capital is needed to augment capacity for power generation. It considers unbundling of KSEB and the creation of separate companies to look after generation, transmission and distribution essential to ensure efficiency.
The Kerala Electricity Board Engineers Association disputes the Centre’s position. It claims the experience of the States which have already undertaken reforms is that unbundling and privatization do not yield the expected results. It says restructuring has been followed by hefty hikes in the power tariff.
There appears to be no clear link between reform and rate revision. Even though there has been no reform in Kerala, there was a major tariff hike. The Electricity Regulatory Authority is now considering KSEB’s plea for a further revision of rates.
The politically controlled unions’ adamant stand against structural reforms has resulted in a situation where the consumer has to pay higher tariff for an inefficient service. In the last few days, the State has been experiencing unannounced power cuts.
The State government is trying to buy peace by transferring all KSEB activities to a company that will be fully owned by it. This means there will be no unbundling. It remains to be seen whether the Centre will be satisfied with such partial compliance.--Gulf Today, Sharjah, September 22, 2008.