Press Note: 12.06.2009

Submitted by Gagandeep Singh... on Sun, 14/06/2009 - 11:20pm

PRESS NOTE

PSEB Engineers, Association challenge the wrong projections being made by the votaries of unbundling to Chief Minister, Punjab regarding the performance of the Board and likely improvements which shall flow after the unbundling of PSEB.

Out of 30 states, 16 states have so far unbundled their SEBs. However even after 8 to 12 years of unbundling, except for Andhra Pradesh, all of the unbundled utilities in other states are still operating with heavy losses. The subsidy burden on the state Governments has also increased. So the primary justification given for unbundling SEBs to create commercial viability has not yet been achieved by these states despite substantial financial packages provided by respective states to these utilities through financial restructuring plan.

The deterioration in performance of most of the utilities like Haryana, Rajasthan, Uttar Pradesh, Madya Pradesh, Assam after unbundling has been well documented in a study carried out by Indian Institute of Public Administration (IIPA) on behalf of MOP/GOI on the performance of power utilities after unbundling.

One of the reasons for the failure of power sector reforms in the country is total marginalization of power engineers in the process of change and decision making process. Out of 59 companies created by unbundling of twelve SEBs, 55 of these companies are being headed by non technocrats, mostly junior level bureaucrats.

Where as the past track record of PSEB is concerned, Punjab was the first state to achieve 100% village electrification in 1976 making green revolution a reality in the country. As on today, only 10 states have achieved 100% village electrification in the country. Punjab has the distinction of having more than 90% of its rural households electrified against national average of 43.62%. This amply shows the priority of the state which expects PSEB to ensure electricity to all sections of the society irrespective of their paying capacity or commercial viability involved in such projects. Punjab has also achieved 100% segregation of agricultural loads from rural domestic loads in order to provide urban pattern supply to villages which is a unique feature in the country. This will go a long way to encourage industry in the villages providing employment opportunities to rural youths and better school education through extensive use of computers etc. The per capita consumption of more than 1000 units is one of the highest in the country.

Whereas transmission and distribution losses are concerned, Punjab and Tamil Nadu are the only states with losses below 20% and both these states have their SEBs intact as on date. On the other hand most of the states having unbundled power companies have their losses in the range of 30 to 40% with Orissa state still having losses above 40%.

PSEB is in the red not due to its structure but due to populist and wrong policies of the successive state governments. PSEB earned a profit of Rs. 175 Cr. in 2003-04 and subsidy paid by the state govt. to PSEB was just Rs. 837 Cr. Even after the announcement of free power to agriculture sector, PSEB earned a nominal profit of Rs. 13 Cr. in 2005-06 but slipped in to a loss of Rs. 1624 Cr. in 2006-07 as no tariff hike was allowed to PSEB in view of assembly elections in Feb. 2007. Even the present govt. did not allow PSEB to file tariff petition for 2007-08 due to local bodies elections compelling the State Regulator to take suo-motto action and allowing a nominal tariff hike of 4.9%. The state government failed to pay a subsidy of Rs. 1362 Cr. to PSEB during 2007-08 and adjusted it against loan badly affecting the cash flow of PSEB.

PSEB has to make advance/cash payments against purchase of coal, oil, power purchase, salary etc for which the monthly bill is more than Rs. 650 Cr. The failure of state government to timely subsidy is compelling the Board to raise loans from the market at very high interest rates thus pushing the PSEB in to red.

Instead of addressing these real issues, the unbundling of the Board is being advocated without realizing that it will further put enormous financial burden on the state government. In case of unbundling, state government has to take over all unfunded liabilities of the Board and also support the ‘Financial Restructuring Plan’ so as to allow the new entities to start with a clean slate. PSEB has already utilized more than Rs. 1200 Cr. Provident fund of the employees for its capital works and the accumulated losses are more than Rs. 8000 Cr. Gujarat Govt. during restructuring of its SEB has committed a total of Rs. 15352 Crore for five years i.e. an average of Rs. 3070.4 Cr per year.

Moreover there is no legal obligation under Act 2003 to unbundle SEBs. Kerala, Tripura states have already converted their SEBs in to one company as permissible under the Act and Himachal Pradesh is also considering this option. Ass

Association supports any change which serves the public interest but we can’t support any illogical step in the name of reforms. Association remind the Chief minister, Punjab regarding commitment made by him during General body meet held in Oct. 2008 that the government would discuss the issue in detail with the Association before taking final decision. We demand that an open debate and consultation with all the stakeholders particularly rural masses be initiated by the political leadership of the state.

(Er. Bhupinder Singh) (Er.H.S.Bedi)

General Secretary President

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