Date:06/10/2008 URL: http://www.thehindu.com/2008/10/06/stories/2008100653900400.htm

Tamil Nadu - Chennai

Call for paradigm shift in the energy policy

T. Ramakrishnan

High-cost power primary reason for TNEB’s losses: trade unions

CHENNAI: Even as the proposal for restructuring the Tamil Nadu Electricity Board (TNEB) is being debated among employees and energy experts, the financial health of the Board is causing serious concerns.

In recent times, Electricity Minister Arcot N. Veeraswami more than once referred to growing losses of the Board. He had also gone on record stating that the Board would suffer a deficit of nearly Rs. 5,000 crore in the current financial year. According to the initial estimated figure, the deficit would be of the order of Rs. 4,730 crore.

Trade unions are of the view that the primary reason for the TNEB’s losses is the high-cost power that the Board has to buy from independent producers.

S. Pancharatnam, president of the Central Organisation of Tamil Nadu Electricity Employees (COTEE), says that on several occasions, the TNEB has been declared one of the best-managed power utilities in the country. So, there is nothing wrong with the Board fundamentally. If the State government and the Board re-negotiates with independent power producers (IPPs), the TNEB can make a turnaround.

V. Ashok Kumar, general secretary of the TNEB Engineers’ Sangam, calls for a paradigm shift in the energy policy that has so far provided encouragement to private players. Mr. Pancharatnam, who made an elaborate case against the re-organisation of the Board during the Minister’s negotiations with trade unions last week, adds that there is no one-to-one correlation between restructuring of power utilities and improvement in the functioning of the utilities. He wants the Electricity Act 2003 to be amended to enable States retain the present structure of their Electricity Boards.

R. Poornalingam, who headed the TNEB during 1999-2001 and former civil servant, says that though the finances of any power utility are dependent on factors including tariff structure, cross-subsidy, cost of generation and cost of power purchase, there are some gains to make if the utility is corporatised.

When there is more than one distribution company, the performance can be compared on the basis of different parameters and this will lead to improvement in their working. He cites the example of Andhra Pradesh which, he says, has shown a marked improvement.

S. Kabilan, Chairperson of the Tamil Nadu Electricity Regulatory Commission, says the issues of restructuring the Board and financial health of the utility are to be seen separately.

The re-organisation of the Board is a matter of constitutional and legal requirement and this will provide greater coherence.