Power Plight

The fruits of privatization must be savored by consumers. If CAG audit of discoms reveals otherwise, the bleak side of privatization will be re-affirmed. 

The power spat in the national capital has been temporarily avoided thanks to Supreme Court. On Friday it ordered Reliance Infrastructure owned BSES firms to pay 50 crores to NTPC, India’s largest power generation utility, within two weeks. NTPC had recently threatened BSES firms to stall power supply had they failed to pay their dues in the stipulated time. Collectively BSES-Rajdhani and BSES-Yamuna owe 300 crores to the NTPC. However, in a reprieve to them, SC has settled the matter at much lower payment till the next hearing due for March 26.

The modus operandi of power sector in Delhi is complex. Amid accusations and cross accusations of corruption and poor governance, it is being hard to identify the malady ailing the power sector. BSES firms assert that the Delhi government is required to pay them subsidy amount so that they can recover their operational costs. They also contend that once government pays them under-recoveries, they will make payments to NTPC. To this Aam Aadmi Party led Delhi goverment hits back stating that the distribution companies are not making losses. They just tamper with their balance sheets to show losses on paper but actually they are incurring profits. The Delhi government has also clarified that the subsidy amount due to discoms from it shall be adjusted against the receivables of government-owned Delhi Transco Ltd, the power transmission company, and the generation utilities, Indraprastha Power Generation Co. Ltd and Pragati Power Corporation Ltd.

Electricity was privatized in Delhi in the year 2002 by Mrs Sheila Dikshit, former Delhi Chief Minister on the grounds of distribution losses being very high in the capital. It was thought that private companies would bring in efficiency and reduce distribution losses. Once distribution losses were brought down, the benefits would be passed on to the consumers and electricity rates in Delhi would be reduced. In 2002, distribution losses were more than 50%. Losses have been brought down to 15% but Power Tariffs have been increased manifold in the last few years. Citing this anomaly, Delhi CM Arvind Kejriwal has ordered Comptroller and Auditor General (CAG), audit in the books of discoms. This move is controversial as CAG can only audit public companies not those of privately-owned. However, government intends to do that because fact that it owns 40% shares in discoms. Discoms have appealed against in this move, the hearing on which is due to happen on February 14. 

The power crisis has regenerated an old debate to boot, which is, whether or not offering power subsidies to consumers is justified. Soon after taking charge as CM, Kejriwal escalated power tariff subsidies to 50 per cent for the remaining period of the current fiscal year. Surplus in state Exchequer might not aggravate the subsidy burden in the shorter-run but such a huge amount of subsidies to even those who can bear the market cost is populism at its worst. 

At present, the power dilemma in the national capital is at its peak. Delhi Electricity Regulatory Commission empowered to monitor and determine the power tariff is also accused of dereliction of its duty. There are many players in the picture and all are at loggerheads with each other. The matter has moved to the court as well. The most important development to be waited and watched for is the CAG audit of private distribution companies. It will reveal whether the fruits of privatization are for private companies or consumers. If for latter, well and good, if not, the bleak side of privatization will be re-affirmed.