Reduce employee cost, power utility told
Rakesh Lohumi/TNS

Shimla, July 26
The Himachal Pradesh Electricity Regulatory Commission has expressed concern over the exorbitantly high employee cost of the state distribution utility, particularly the pension obligation, and has expressed doubts if such costs can be sustained through the tariff mechanism.

The employee cost, even without the burden of the arrears of pay revision, is Rs 1.15 per unit, the highest in the country, and it is bound to increase further. In the neighbouring hill state of Uttarakhand, it is as low as 25.94 paise per unit. Even in Punjab, it is 81.76 paise per unit. The employee cost has increased from Rs 576 crore to Rs 815 crore over the past two years. The pension annual liability has increased to Rs 159 crore and is projected to reach Rs 213 crore over the next two years.

“While the current cost of employees is increasing as a usual phenomenon in spite of attrition, pension and terminal obligations are likely to increase with phenomenal volumes. A stage will arrive shortly when the pension obligations will be larger than the current cost of employees and with a positive life expectancy rate, long-term arrangements for pension have to be made. It cannot be visualised whether such costs can be sustained through the tariff mechanism”, the commission has observed in the latest tariff order while addressing strategic issues.

It has underlined the need for making appropriate institutional arrangements to manage this challenging obligation with the participation of all stakeholders, including employees, the state government, the distribution company and the commission. Various legislations and the regulatory framework are already in place in the country.

The commission has also taken notice of the “distortions in performance” and transmission and distribution losses, which otherwise look comfortable in comparison to other utilities, exceeding 25 per cent in industrial areas and some rural electrical divisions.

While some of the losses can be reduced by technological and infrastructural improvements, some are on account of thefts and commissions and omissions on the part of the staff, which have to be addressed by way of strong governance, the commission has observed.