The state assembly - which almost unanimously passed the Orissa Electricity Reform Act, paving the way for unbundling of the Orissa State Electricity Board in an attempt to privatise the energy sector - now appears bent upon rolling back the reforms.

The mood of the legislators, cutting across party lines, was evidently negative during the recently-concluded winter session of the assembly. Given a chance, they would repeal the Act. Even ruling party MLAs were seen vociferously demanding a review of the reforms.

Outside the assembly too tempers are rising. The recent decision of the Orissa Electricity Regulatory Commission (OERC) to allow a power tariff hike by about 20 per cent for domestic consumers and the agriculture sector only added fuel to fire.

Already there was widespread discontent among consumers about poor power supply and high tariffs. The matter became worse when the supercyclone hit the 14 coastal districts of the state. The distribution system suffered badly, with companies failing to restore supply in rural areas. Some pockets in rural Orissa are still reeling under darkness. The situation has been aggravated by drought conditions in western Orissa, which has squeezed the paying capacity of people living in half the area of the state.

Gauging the mood of the people, Opposition parties have threatened to take the matter to the streets. The Congress, which, in fact, steered power sector reforms in the state when it was in power during the late 1990s, has threatened to organise demonstrations protesting against the tariff hike.

The Orissa Gana Parisad, an emerging powerful people's organisation, put up a show before the Governor's House. Its chairman, Bijaya Mohapatra, has threatened that the people would be told not to pay their bills at the increased rate. The CPI(M), CPI and Janata Dal (Secular) combine has decided to organise a convention to review power sector reforms. Janata Dal(S) president Ashok Das has demanded that the government promulgate an ordinance to revoke the Reforms Act.

Reforms are being opposed in the ruling Biju Janata Dal too. Minister of state for science and technology Ranendra Pratap Swain has demanded review of power sector reforms and handing over of the investigation into the Rs 505-crore Gridco scam to the Central Bureau of Investigation. Mr Swain made all these demands in the presence of Chief Minister Naveen Patnaik at a meeting of the Electrical Engineers' Association here recently.

The tariff issue has, meanwhile, taken an interesting turn with the state government and the OERC washing dirty linen in public. It all began in December 2000, when the state energy department shot off a letter to the OERC asking it not to allow a power tariff hike to distribution companies.

Ruffled by the Rs 505-crore Gridco scam, the state energy department thought it wise to wash its hands of the tariff hike which it knew was coming. The government was at the receiving end as it failed to collect the Rs 505 crore dues from the three distribution companies owned by Mumbai-based BSES Ltd.

To avoid further embarrassment, it wanted to shift the responsibility of the tariff hike to the OERC.

However, much to its discomfort, the OERC accused the government of double standards. It pointed out that the government was advocating a tariff hike for bulk supply by Gridco, and at the same time was requesting it not to allow a hike to distribution companies. The OERC suggested that the government could absorb the tariff hike by providing subsidy.

As people started venting their anger against the tariff hike, the government clarified that it had nothing to do with tariff, adding that it was the OERC that was responsible for the decision. Refusing to take it lying down, the OERC has expressed its bitterness in public.

Taking strong exception to the ill-informed criticism of the government on the tariff hike, OERC chairman DK Roy, in a letter to the government, has cautioned "having made its views public against the tariff hike, the state government has not only given scope to consumers for making a loud protest against the hike but has given a fillip to the backlash against the reforms."

Though the state government and the OERC are fighting a bitter battle in public over the issue of tariff hike, people in the state believe they are engaged in a mock fight to divert the anger of the consumers. Tariff experts feel neither the state government nor the OERC can shrug off their responsibility on the issue. The government can intervene and absorb the hike by providing subsidy. In the pre-reform days, the government was pumping in about Rs 250 crore per annum to the State Electricity Board to absorb the loss.Experts also blamed the OERC for calculating tariff on certain assumptions.

For example, they pointed out that the OERC has no definite information about the transmission & distribution loss. The government record says it is 42 per cent, the distribution companies claim it is higher than that, and the OERC has pegged it at 34 per cent. In the absence of an energy audit, how is it that OERC fixed the T&D loss at 34 per cent, they ask. According to them, the T&D loss would be much less than 34 per cent in Orissa given the locations of the thermal and hydro power stations and the industrial units.

In 1993, following liberalisation of the Indian economy, Orissa decided to usher in reforms in the power sector taking a $350 million World Bank loan.

The process started with the unbundling of the OSEB into two entities - Gridco and Orissa Hydro Power Corp (OHPC). While Gridco would be in charge of T&D, OHPC would take over all hydel stations in the state. Earlier, the state government had sold out its Talcher Thermal Power Station to National Thermal Power Corp. Orissa Power Generation Corp (OPGC), which owns 2x210mw coal-fired stations at Ib Valley, was operating as a special entity.

The state government then sold 49 per cent of stake in OPGC in favour of US utility AES Corp and handed over the management of the company. This was followed by Gridco spinning off four distribution companies - Cesco, Wesco, Nesco and Southco - as subsidiaries only, to be privatised later on. In April 1999, Gridco offloaded 51 per cent stakes in three distribution companies - Wesco, Nesco and Southco - in favour of Mumbai-based BSES Ltd. through an international competitive bidding route.

Then, Gridco cajoled AES Corporation to take up 51 per cent stake in Cesco as winner of the biddings Tata Electric Companies refused to acquire the subsidiary on the ground that the conditions were not acceptable to it.

However, the reforms process is facing the worst ever attack from all quarters in the recent months. Not only the people and the Opposition, but also the government and the OERC have seemingly become sceptical about success of the reforms.