Bundled or unbundled, PSEB won’t change
That is at least what the government says; not many are convinced
Jangveer Singh/TNS

Chandigarh, April 8
The much-awaited unbundling of the PSEB, which is expected to receive Cabinet approval on Thursday next week, could well turn out to be an anti-climax with little or no change in the status quo barring in the account books.

With the next Assembly election due two years later, the SAD-BJP government in the state appears in no position to take tough decisions. So, even after unbundling, the government, which has ruled out privatisation at least for the time being, will continue to own the companies created after the bifurcation. There will be no reduction in the number of employees, no change in either subsidies or tariff and the same set of people will continue to be at the helm of the two new companies, who have so far been managing or mismanaging the PSEB.

So, why unbundle and create two new companies? The cosmetic changes apparently are at the insistence of the Central government and the Planning Commission, both of which have been serving ultimatums to the state government to initiate power reforms. The state government was given as many as 14 extensions and the current deadline expires on April 15. Thus, the urgency to set the ball rolling lest the state government loses out on central grants and plan allocation.

The officials closely associated with the process refuse to say anything on record. Since the unbundling is yet to take place, they express their inability to say anything officially as yet. But off the record they have plenty to say. Consumers need have no fear because post-unbundling, the electricity bills will not be higher and the subsidies will continue. Service conditions of employees will also remain the same, they claim.

Gujarat, one of the first states to unbundle its electricity board, continues to attract private investment in generation and distribution companies, which compete with each other and bring in greater efficiency in operations. The Gujarat government had also come up with a five year financial package when it undertook unbundling in order to restructure the utilities.

What’s more, Gujarat created distribution companies for each region. The companies were promised total support in dealing with electricity theft, for which lodging FIRs and arrests were made mandatory.

The Punjab government has been expressing its inability to bear the huge financial burden of writing off its loans to the PSEB and taking over its liabilities. The government, say officials, has no money to wipe the slate clean.

The worst flaw in the state government’s plan is said to be its decision to bundle generation and distribution together with one of the two companies, wholly owned by the government. This would defeat the purpose of allowing multiple companies to generate power and take care of distribution, which would ideally have ensured better and more efficient service and led to rationalisation of rates.

Political interference is cited as one of the key reasons for PSEB’s failure to reduce power theft in Punjab. Directions, it is alleged, are issued routinely and verbally to desist from surprise checks in the constituencies represented by the members of the ruling coalition. Even after an unbundling of sorts, the situation is unlikely to change, admit the officials.

While government sources rule out the speculation that the present PSEB chairman, HS Brar, and Member (Transmission) SC Sabharwal are tipped to head the two new entities after unbundling, there can’t be smoke without fire. Officials, however, insist that both the companies will be headed by professionals. With the rest of the structure remaining virtually intact, the professional heads are unlikely to make much of a difference though.

The present PSEB chairman is actually credited with ensuring that the parliamentary constituency of the Chief Minister’s daughter-in-law is supplied uninterrupted power supply during the entire period of the election campaign, when the rest of the state was reduced to darkness. He also went out of his way to shower allotment of tubewells out of his discretionary quota to Bathinda and surrounding areas, the pocket borough of the Chief Minister. He was “righting a previous wrong” , he said.

Only time will tell if the exercise turns out to be a cruel joke with the people or the beginning of something better. Chances are that after the unbundling it will be a case of “ PSEB is dead. Long live the PSEB”.

Governmentspeak

F Unbundling will not lead to higher electricity bills

F Subisidies to farmers will continue

F So will power subsidies to BPL and Scheduled Caste families

F There will be no privatisation. Companies will be fully owned by the state government

F Service condition of employees will remain unchanged

F After bifurcation, companies will have ‘clean’ balance sheets

F Professionals and not political appointees will head the companies

FACT SHEET

F Punjab sought and received 13 extensions from the Centre to complete the process of unbundling.

F The last extension was granted on February 15 this year for two months.

F Punjab Cabinet likely to approve the proposal on April 15

Process of unbundling

F The Punjab State Electricity Board will cease to function.

F The state government will take over PSEB's assets and liabilities

F Two separate companies will be formed for generation, transmission and distribution.

F The Board's assets will be distributed to these companies

F The companies will start functioning with a clean slate

Partial vs full unbundling

F As many as 12 states have implemented unbundling, partially or fully

F Punjab, Bihar and Jharkhand are among the states yet to implement it.

F Haryana unbundled its power board 12 years ago.

F Himachal Pradesh has initiated the process.

Competition & rationalisation

F Power sector reform aims at ending state monopoly.

F The idea is to encourage competition

F Consumers to have more options

F Competition will ensure rationalisation of rates

F More than one company in each area necessary for competitive efficiency.

Transmission and Distribution losses

Punjab has T and D losses of 20 per cent.

Theft

6 to 7 per cent of electricity generated is stolen.

In rupee terms it comes to Rs 700 crore.

Expenses

(2010-11 projection)

Cost of fuel – Rs 3,623 crore

Cost of power purchase – Rs 5,876 crore

Modernisation – Rs 429 crore

Interest charges – Rs 1,923 crore

Employees

Total number – 64,133

Engineers – 2,000

Junior Engineers – 5,000

FINANCIAL POSITION OF THE PSEB

The PSEB’s financial position is such that insiders say it is a miracle, it has not collapsed till now. The board has accumulated losses of Rs 8,000 crore and has an outstanding loan of Rs 16,000 crore. Its working capital loan, which was Rs 900 crore in 2005-06, is now Rs 6,500 crore. What is most worrying is that the board will pay an interest of Rs 1,600 crore on loans taken by it in 2009-10.

POWER BLOCKS

Farmers want electricity
A farmer cannot even set a fuse box right without bribing someone, said Rajewal while explaining his support to unbundling. All that farmers in the state wanted was uninterrupted power supply. Any player who assures a better quality of service should be welcomed, he felt.

Not convinced
BKU (Ekta-Ugrahan) secretary Sukhdev Singh Kokrikalan told TNS that the group was not convinced with the state government’s assurances. Unbundling, he said, would eventually lead to privatisation and the group would oppose it ‘democratically’.

Common seniority
PSEB engineers want a common seniority for which they have pleaded that all employees be retained on the rolls of one company and then sent on deputation to the other. Job security and professional management is what the engineers want, says Association chief HS Bedi.