The Hindu : Making power reforms apolitical, safe option

Online edition of India's National Newspaper
Wednesday, Oct 02, 2002

Opinion

Opinion - News Analysis

Making power reforms apolitical, safe option

By V. Jayanth

CHENNAI Oct. 1 . The State Electricity Regulatory Commission has taken the first step in issuing a public notice for revision of tariff for various categories of consumers. It has now to go through the motions of a public hearing and then notify a new tariff for the State. Last December, the Tamil Nadu Electricity Board increased the tariff to an extent, but decided to wait for the statutory body to take up this exercise. When the Government made the SERC fully operational a couple of months ago, appointing a Chairman and a member, the stage was set for the Commission taking up the tariff revision.

Apart from the upward revision for most sections — some segments like places of worship have been left untouched — the SERC has introduced a marginal levy for agricultural consumers too. It has been proposed to charge them at 50 paise a unit or Rs. 600 a year per hp. There is bound to be resistance to and even agitations against this move, and it remains to be seen how the Government will respond. The safest option would be to steer clear of the whole process and make it "apolitical" — an economic decision taken by the SERC as per the provisions of the law, to make the TNEB a viable entity.

Govt. in a bind

With the Government committing itself to reforms in the power sector and signing a Memorandum of Understanding with the Union Power Ministry to implement them and become eligible for additional funding, it cannot afford to go back on its word. There is also a commitment, to wipe out the losses or deficits and make the TNEB a profitable proposition over the next two or three years. The proposed revision marks a beginning of that process. The TNEB could bring down the deficit from Rs. 2,408.69 crores last year to just Rs. 633.06 crores in 2003-04, if the proposals are implemented entirely. The projected loss for the current year is Rs. 1,717.61 crores. That means, the deficit could be halved in a year and perhaps wiped out the following year.

A former TNEB Chairman says that over the years, the Board has taxed high tension and commercial users heavily to cross-subsidise domestic consumers and the free power scheme for farmers. He insists that the TNEB "is in a much better shape than most SEBs and only needs to shore up its finances through a proper fixation of tariff".

Both in transmission and distribution loss and in revenue collections, the TNEB was better off than many SEBs. "We need to ensure 100 per cent metering of all connections and scrap all free power schemes. An element of cross-subsidy can be there, but this must also be phased out over a decade or so," says the former TNEB chief.

Sources in industry say it has borne the burden of funding the subsidies for too long and the proposal to charge the agricultural sector needs to be welcomed by all. "It is time we shifted the focus to the quality of power and its dependability. We must do away with unannounced power cuts or loadshedding and ensure supply to rural areas and farmers when they want. If they start paying, they can insist on quality power at the right time. They should not be asked to operate pumps at night or when the TNEB wants them to", says a city chamber president.

Meanwhile, the Chief Minister, Jayalalithaa, in a statement, clarified that the SERC notice is a `preliminary stage". "There is no need for apprehensions and misgivings to be aired from any quarter and it is hoped that a decision on revision of tariffs will be taken by the SERC in a judicious manner, taking into account all aspects related to this issue."

Ms. Jayalalithaa made two things clear — the SERC was constituted by the DMK regime in March 1999 (though it was not fully operational) and the Madras High Court clearly ruled that future tariff revision be undertaken by the SERC and not by the Government.

(The Electricity Regulatory Commission Act 1998 has taken away the function of revising tariff from the Government / Electricity Board and given it to the SERC.)

The TNEB has asked for revision in tariff from December 1, 2002 and the SERC has given time till October 23 for interested parties to file their objections. Public hearings will be held thereafter.

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