Tuesday, April 25, 2000,
Chandigarh, India



Power sector reforms

THE article “Turmoil in power sector” by Mr N.S. Vasant is an expert commentary on the so-called reform plan of the Central Government and should be read in the backdrop of the statement of the Prime Minister at the state Power Minister’s conference on 26-2-2000 to dismantle the (State Electricity Boards) SEBs part of the reforms and restructuring process.

The SEBs were constituted by an Act of Parliament in 1948 for the integrated growth of power industry in the country. In the wake of successive droughts and consequent chronic food shortages in 1960s, rural electrification was encouraged through budgetary support for the exploitation of underground water potential by the use of tubewells.

At the end of 1997 the number of pumpsets running all over India was 11.8 million. The share of agricultural consumption in the total sales has increased from just 4% to 30% . In the early 1950s only 0.54% of villages were electrified, but now more than five lakh out of six lakh villages in India have already been electrified — about 85%.

The per capita consumption has increased from 15.6 units to 350 units. Although rural electrification was unremunerative in nature due to low tariff, high power losses and a huge maintenance cost to achieve self-sufficiency on the food front and to improve the rural economy no government thought of commercial viability of SEBs.

Although Section 59 of the Electricity (Supply) Act, 1948, makes it mandatory for the state government to allow SEBs to fix their tariff in such a way as to ensure a minimum 3% ROR (rate of return) on their fixed assets, successive state governments have violated this provision of the Act of Parliament resulting in deterioration in the financial health of the SEBs. The additional revenue mobilisable with 3% ROR in the last seven years (1992-93 to 98-99) would have been Rs 66724 crore. So where is the resource crunch?

It is distressing that on the one hand the government is allowing a minimum 16% return to private operators in the power sector but on the other the SEBs are being denied even 3% return. Some of the states like Punjab even allow free electricity to a section of the consumers without compensating the SEBs. How a commercial organisation can think of providing free electricity to a section which consumes more than 30% sales.

World Bank-sponsored power sector reforms through the unbundling of the SEBs and subsequent privatisation have failed to either improve the financial health of the SEBs or to improve consumer service. Since the introduction of the reforms in the state of Orissa, the average tariff has increased from 98.8 paisa/unit to 280.77 paisa/unit — by three times — but during the same period the commercial profit of Rs (+) 26.9 crore has turned into a loss of Rs 211 crore.

In Haryana, the average tariff has increased by over 2.5 times since the introduction of reforms, but the board, which had recorded a commercial profit of Rs 46 crore in 1995-96, is now in the red with a loss of Rs 375.4 crore. Similarly, in Andhra Pradesh, the commercial loss recorded in 1998-99 was Rs 1011.4 crore although it was a profit of Rs 3.9 crore in 1995-96.

It is evident that despite World Bank loans, disintegration of the SEBs and a substantial increase in tariffs, the financial position of these SEBs has not improved, and this will become an excuse for the private companies to further increase the tariff, causing further hardships to the common man.

The tragedy is that policy decisions regarding the power sector are being taken by bureaucrats and politicians having little knowledge of the subject. Reforms in the power sector can be carried out more effectively without unbundling of the SEBs, provided eminent power engineers are involved in the policy-making process.



Power cuts and exams

Finally the summer has stepped in, and the ordeal of the ordinary citizen of Haryana has begun. Here in Hisar power cuts are so frequent and unscheduled that you can never rely on anything that works on electricity.

No sense of professionalism is being shown by the HVPN. Ok, if you can’t supply electricity for 24 hours, at least you can make scheduled power cuts. Citizens pay and suffer. This is exam time, and students have to toil in heat and darkness. It seems the government thinks that the exam is a small issue to be considered while making frequent power cuts. Getting services for which we pay is our right, and I hope somebody in the government will take care of this and things will improve. But for the time being suffering continues.


Unhappy rural banks’ staff

I wish to voice the concern of the employees working in 196 regional rural banks in our country. Recently the Indian Banks Association reached an agreement with the various unions of the employees of the public sector banks thus paving the way for the implementation of the seventh bipartite settlement in the banking industry. But the government is keeping mum over the demands for wage revision by the employees of the regional rural banks sponsored by these public sector banks.

They are being paid salary and other benefits on the basis of the fifth bipartite settlement reached in 1987. The nonchalance of the government has left the employees of the gramin banks dispirited, dejected and demoralised. The government must shed its obduracy and release the benefits of wage revision to these employees without further delay.

Kainaur (Ropar)

Kinnow marketing

In his write-up “Travails of kinnow growers”, published in The Tribune on April 3, Mr S.S. Kohli has made reference to my article in which I had shared my experiences and assessment of the fruit market of Bangalore.

First of all, I would like to make it clear that I did not go to Bangalore for one truckload of kinnows. I received 15 trucks in Bangalore, and my business acumen suggested that I meet my middleman when dealing in such large volume.

Somehow I felt that since Bangalore was totally a new area of marketing for farmers, it was fair to bring to their notice the visible discrepancies and the kind of temptations the middlemen offer to exploit them, and I see no reason which suggests why I should not have done that.

Kinnow is not a very acceptable fruit in the international market, and, more importantly, there is no proper infrastructure available to transport and store kinnows at the ports. To provide for such kind of infrastructure remains outside the preview of the farmer, whose job is to produce and not govern.



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