The AIPEF chief said the experimentation in power sector continued only to benefit the private players at the cost of tax payer’s money.
Yogindra Mohan

Patiala

The Union Power Ministry has launched an action plan to provide a reform-linked interest subsidy to utilities and promote distribution franchises on receipt of Shunglu panel report.

The reform process in power sector of country started with unbundling of state electricity boards into different companies centred on generation, transmission and distribution. The next part was privatisation of these companies in due course of time. The assets of electricity boards were sold to private companies at throwaway prices in the name of improving efficiency and competition in power sector.

Padamjit Singh, Chairman of the All-India Power Engineers’ Federation (AIPEF), said that now another experiment, under the name of `Franchisee system in power distribution’, is going to be started in the power sector. The Shunglu panel in its report has suggested restructuring of power distribution companies, franchisee system for power distribution, and annual tariff rise before taking over their losses by a special purpose vehicle.

He said the panel in its report has suggested franchisee in 255 towns including peripheral areas of country with criteria of population of city over three lakh or annual energy supply of over 100 million units. The introduction of the franchisee model in 16 towns of Punjab and 15 towns of Haryana which consumes 40 per cent of power has been recommended by the Shunglu panel to bring down commercial losses to level of 18 per cent.

The Shunglu Committee has proposed handing over of state electricity board’s assets worth hundreds of crore town-wise to franchisee completely free for a period of 20 to 25 years. This is even worse than the failed privatisation experiment, the AIPEF chief added.

He said the Panel should have suggested those areas with high commercial and technical losses and given a time frame to reduce these losses to an acceptable figure. The Panel has suggested maximum earning industrialised areas like Ludhiana, Gurgaon, Panipat and Khanna and Mandi Gobindgarh for start of privatisation.

He said a franchisee cannot purchase power as he is not licensee and it is the duty of Discoms to supply power to franchisee at pre-determined cost irrespective of power purchase cost. The report maintains that if any assist made by franchisee, he will be at liberty to take away assets after the expiry of fixed

period.

The AIPEF chief said the government never tried to diagnose the problems faced by power sector but only tried to treat the symptoms. The experimentation in power sector continues only to benefit the private players at the cost of tax payer’s money. The subsidies which were denied to state electricity boards are now generously being given to private companies. It is simply privatising the profits and nationalising the losses.

Franchisee system in power distribution means beginning of end of role of state Discoms. The recommendations of committee to bring distribution utilities out of financial distress would not solve the problem. It will only defer the burden of debt as the tenure of loan would be raised, he added.
Power engineers’ body sees pitfalls in franchisee system