KSEB officers object to state Bill
15 December 2001
The Kerala State Electricity Board Officers Association (KSEBOA)
has expressed its concern over the provisions of the Kerala
Infrastructure Development Bill, 2001, which aims at promoting
private sector participation in all vital areas, including the
power sector in the state.
In a statement here, the KSEBOA said the Bill had indicated the power sector (generation, transmission and distribution) as the first of the 22 sectors proposed to be opened up for private investment.
Power transmission is of strategic significance. Privatisation of this area is permitted in no other state in the country. Even in Orissa, which has taken big strides in privatising the power sector, power transmission is still being retained as a public service. The Electricity Bill introduced in the Parliament also proposes many restrictions in allowing private sector participation in developing power transmission, the association said.
The experience of Orissa should be a lesson for states like Kerala, while contemplating privatisation of the power sector. Within a short span of time, the electricity tariff in that state had gone up by three times. The American company, which had taken over the responsibility of power distribution in Orissa, is now demanding a further 70 per cent hike in power tariff, the association said.
KSEBOA has noted that power supply is yet to be restored to 800 villages in Orissa, where the supply lines were damaged during a natural calamity a year ago. Profits have now become a bigger priority than the needs of the state and the people there. There were also reports that the transmission-distribution losses in Orissa had now touched 45 per cent. Salary disbursement to the power sector employees is getting disrupted for months together.
The association asked whether the government, while drafting the Bill, had taken into consideration the distinctiveness of the power sector as a utility service that directly affects the life of ordinary people. It would cause a lot of confusion if, as provided for in the Bill, the proposed Infrastructure Development Board were to be entrusted with the responsibility of taking decisions pertaining to the power sector, overriding the authority of the government as well as the Electricity Regulatory Authority being set up in the state.
The association also expressed concern over the provision in the Bill for awarding projects to private parties by fixing the conditions through direct negotiation. Such an arrangement would encourage corruption. There was a standing direction from the Union government to shun the system of awarding power projects through the memorandum-of-understanding route. This direction also insisted that global tenders should be floated for awarding power projects.
The justification for bringing such a Bill before the state assembly was that the government could not find its own resources for developing the infrastructure in the state. At the same time, the Bill provided for extremely attractive government incentives to the private companies taking up projects in the state. In fact, if all the promised incentives were to materialise, a private company would get the opportunity to handle with full freedom a public utility and make big profits without investing any money in the project, the association alleged.
As per the provisions of the Bill, the governments equity participation in a project taken up by a private party could go up to 49 per cent. Further, the government would be extending a subsidy of 15 per cent of the project cost. The government could also help the entrepreneur with loans, guarantees and escrow cover. If an entrepreneur were to get all these sops, he would have to invest only around Rs 30 lakh on a project costing Rs 100 crore, the KSEBOA said.
The association said the provisions of the Bill, instead of promoting private investment, would only help the private sector exploit public wealth.