Search for a Solution

THE CENTRE'S OFFER of a one-time settlement of dues from the State Electricity Boards is yet another initiative to address the problems in the electricity sector, but so many initiatives have been launched over the past decade and so many commitments made at conferences of Chief Ministers and State Government Power Ministers since 1992 that it is difficult not to be sceptical about this new scheme. The problem of large dues of Rs. 26,000 crores to the Central Government power generation utilities is symptomatic of the crisis in the sector. The losses of the SEBs have mounted to such levels that compared to the 3 per cent return on capital that by law they are expected to earn, the combined return is now a negative 38 per cent.

There is already a scheme that links securitisation of the SEBs' outstandings to a part of the normal Plan assistance to the States. But the new proposal, whose modalities are to be worked out over the next few weeks, will cover the entire amount of Rs. 26,000 crores due to the Centre. A one-time settlement of such a large amount will surely be linked to a major restructuring of the SEBs. However, there is now a Central Government programme that makes additional financial assistance contingent on a revamping of the electricity sector in the States. Five States have entered into agreements with the Centre as part of the Accelerated Power Development Programme (for which the Union Budget for 2001-02 has increased allocations from Rs. 1,000 crores to Rs. 1,500 crores). There will then be two Central Government programmes (three if the securitisation scheme is to continue as before) overseeing much the same set of restructuring activities. The conference of Chief Ministers in New Delhi witnessed yet another commitment by all the States - other than Punjab and Tamil Nadu - to levy a minimum tariff of 50 paise for every unit consumed in the agricultural sector. However, promises on this count as also others such as achieving 100 per cent metering, lowering theft and reducing transmission and distribution losses formed the core of the 1996 Common Minimum National Action Plan for Power which remains largely on paper. Reforms in the power sector have taken different paths over the past decade beginning with the ill-advised thrust on private sector generation without first addressing the problems of the SEBs. Unbundling transmission from generation, the next experiment, has so far fared no better in States such as Andhra Pradesh and Orissa. The new emphasis on depoliticising the setting of tariffs by establishing State Electricity Regulatory Commissions has not achieved much either, though to be fair to the system it needs a longer period of operation before a firm opinion can be expressed. The lengthy agitation that followed the steep tariff hike in Andhra Pradesh and the decision of the Government of Karnataka to temporarily stay that aspect of the SERC's tariff order that covered the agricultural sector shows just how difficult the process is going to be. A positive sentiment that was expressed at the New Delhi conference was that there was no single model applicable to all States.

When cut to the bone the solutions for the SEBs' crisis are essentially straightforward and comprise a mixture of technical, financial and political instruments. Power theft - where the biggest culprits are often the high tension and not household or small-scale industry consumers as usually portrayed - can be reduced only with political will. A lowering of the ``technical'' losses in transmission and distribution will require additional investment and better technical management. The huge losses in agriculture are often attributed to populist decisions by the State Governments. That is the case but if farmers can be convinced - through pilot experiments - that the SEBs can provide quality power they are sure to be willing to pay for assured and reliable electricity rather than make do with the erratic and low-quality ``free'' electricity that they now receive.

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Section  : Opinion
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