Tripping reforms

Updated: Nov 23 2005, 05:30am hrs
The governments decision to dilute the provisions of the Electricity Act to placate the Left parties is a bad move. The Act seeks to eliminate cross subsidies between different segments of consumers, which is unacceptable to the Left. Hence, the proposed amendments. In other words, the government believes that industry must always pay a part of the farmers power bills, a completely anti-reform measure. It is another matter that the amendment means little. For, the cross-subsidy, which at present is of the order of Rs 2,000 crore a year in Andhra Pradesh, the top reformer, can be reduced over time by the regulator to Re 1! So, in reality, this is hardly a blow to power reforms. But then, it sets precedent in breaching a cardinal principle of reformsuser charges must be paid by all. This move also goes to show that the Left is frittering away governments time and tax payers monies in exercises that mean little. And, interestingly, back home in Kolkata, most of the consumers in the CESC distribution zone pay what it costs to serve them!

Clearly, the Lefts request is more of a palliative for its phobiathat the cross subsidies will be eliminated one fine morning. And, the phobia is borne out of a bitter experience a few years ago, when a former power regulator eliminated cross-subsidies one fine morning. Of course, it did not take effect, when the government went in appeal to the high court. So, rather than talk them out of this fear and convince them on the safeguards in the system to avert such hard landings, the government has succumbed to administering a placebo!

And, while the Left is occupying itself in pursuing such silly objectives, the reform process in states is hardly gathering pace. In fact, an important indicator is the generation capacity addition on the captive front. Industries prefer captive power generation capacity when they dont trust power supplies from the state power utilities, a direct reflection on the reform process. And, in the last year, Indian industry has decided to set up over 20 new captive plants in one of the coal bearing eastern states to power their units!