Power Play For Top Job

Updated: Apr 4 2002, 05:30am hrs
Who is the most powerful man in the country Clearly not Prime Minister Vajpayee after the manner in which Gujarat chief minister Narendra Modi cheerfully cocked a snook at him, and after the Vishwa Hindu Parishad told him to not to meddle in what they called religious affairs. That, to the uninitiated means Mr Vajpayee had no business telling Mr Modi he simply had to rehabilitate the Muslims killed in Gujarat under his watch!

Seriously though, what this column is talking about is the hectic lobbying in the capital for several weeks now to choose the next power secretary. A as a result, theres no power secretary to replace the one whos just retired. Of course, there are those who argue that this is really small change compared to the fact that its only now, eight months after S L Rao demitted office, that the government has appointed a head for the Central Electricity Regulatory Commission, the top regulator for the countrys power sector. Considering that the CERC is the ultimate arbiter on rules and tariffs for the sector, not having a regulator for so long is just short of criminal.

To cut a long story short, a couple of months ago, power minister Suresh Prabhu decided that the real problem ailing the countrys power sector was at the distribution end from the time the electricity is sent out from the power plants to when it reaches the consumer and so a technocrat and not a bureaucrat was needed for the power secretarys job. Now, I am no supporter of the bureaucracy (how can anyone), but Mr Prabhus solution misses the wood for the trees. Hes identified the problem correctly, but has got the solution wrong. But more of that later.

Right now, whats interesting is while Mr Prabhu is said to be rooting for R V Shahi who heads the private sector power-distribution firm BSES Limited, other politicians have their own favourites. Mr Prabhus political boss, Bal Thackeray himself is believed to be rooting for Yogendra Prasad, the chief of the National Hydroelectric Power Corporation. With such strong support for various candidates, its not surprising that the search committee set up to choose the secretary has not come up with firm recommendations and has left the decision to Mr Vajpayee. Those in the know will tell you, that this is just a face saver till the various factional interests reach a compromise.

Those familiar with Mr Shahi (a former PSU-man himself) say, is quite efficient, and the fact that some of the other candidates have powerful politicians backing them, does kind of put a question mark over their credibility. But this column is not going to recommend, much less choose, a power secretary. The issue really is whether a technocrat, or anyone else, will be able to solve the countrys power problems in the absence of a strong political will, a will not shown by either Mr Prabhu, his predecessors, or various state CMs who, eventually, are the only ones with the power to make any changes.

Mr Prabhu, as weve just said, is correct in identifying that the real problem lies at the distribution end of the power sector. After power is produced at the power plants, between 40 and 50 percent gets stolen. But appointing a distribution person wont solve the problem. The problem lies in two areas. One, the states do not allow electricity boards to charge remunerative rates for the power they produce the farm sector still pays well under 50 paise per unit of power as against the Rs 2 or so it costs to just generate the power. More importantly, theres no real penalty or prosecution of power thieves. By the way, Mr Shahis BSES which controls three of Orissas four privatised distribution companies has not been able to collect tariffs and owes the government around a thousand crore rupees. So clearly Mr Shahis distribution background is no real recommendation for the power secretarys job.

Another serious flaw in the countrys electricity reforms is that the distribution end is itself not being reformed correctly and it is firms like BSES that are benefitting from this. After the chief ministers conference on March 3, 2001, the government appointed an expert group headed by Montek Singh Ahluwalia to examine various issues in the power sector. The panel examined experiences of various countries and concluded that the only way to reduce electricity prices was to introduce competition. That is, allow more companies to sell power to the final consumer instead of the present model of (like in Orissa) allowing just one firm to sell to just one buyer the state electricity board. The presence of many suppliers is why telecom tariffs have come down so dramatically. And with both TEC and BSES supplying power to some common areas in Mumbai, the electricity rates here have also fallen dramatically.

But, presumably due to pressure from the incumbent players whose profits will plummet if Monteks recommendations are accepted, Mr Prabhus ministry continues to sit on the report. As Ive argued elsewhere, (The Indian Express) Delhis proposed privatisation is flawed for these very reasons and will result in windfall gains for companies. These are the real issues and until they are sorted out, there will be no real solution to the countrys power problems. Getting a technocrat to replace a bureaucrat may not be a bad idea, but is not going to solve anything. Except to give the powers-that-be the feeling theyve done their bit to improve the countrys lot. u