Status of Privatisation of Electric Supply in Maharashtra

Lok Raj Sangathan talked with Shri Joglekar, Vice President of the MSEB Workers Federation (AITUC)

LRS: What is the state of privatization in the electricity sector in Maharashtra?

Shri Joglekar: There is a freeze on new employment in MSEB. There used to be 1,15,000 employees in MSEB in 1982 before the freeze. Now it has come down to 95,000. There is no new employment; not even on compassionate grounds. There are some jobs which have been given to private agencies. For example, meter reading and bill collection is being done by private parties. Thane alone has 70 agents for this. Four to five sub-stations are being run on contract basis for the past two years. These are supposed to have been run by ITI diploma holders, but in actual fact the private agencies are not using Diploma holders. In generation sector, erection of various activities are being done on contract basis. Security and sweeping functions have been handed over to private agencies on contract. High pressure welding is being done on contract.

There have been attempts to start VRS scheme and for trifurcation of the electric supply functions into generation, transmission and distribution. We have been able to resist these moves so far.

LRS: What moves are being contemplated for privatization of the State Electricity Board?

Shri Joglekar: The most important push is now coming from the Central government. The Electricity Bill 2003 was passed in the summer session of the Parliament and gazetted on 10th June 2003. According to this Bill, within one year, trifurcation of generation, transmission and distribution and privatization must be put on the cards in each of the states. Otherwise, on 10th June 2004, there will be not Electricity Board, which came into existence as per the Electricity Supply Act 1948, as the Act itself has been annulled by the new Act.

This Bill has abolished all prevailing laws on the subject in one stroke. State Acts also stand repealed. State Transmission Undertaking will look after the transmission of electricity of any generating company to any distribution centre. Board employees are supposed to be employed in the same post by the distribution company. (However, the trap is that this is only required by the Act for a limited period of time. After this period, the private company will be free to take whatever actions they deem fit, including retrenching of employees.)

LRS: What has been the stand of your association on this question?

Shri Joglekar: Our stand has been clear. We consider generation-transmission-distribution to be unitary function. Trifurcation is neither in the interest of the MSEB employee nor in the interest of society at large. The Electricity Bill is clearly being pushed in the interest of a minority of the population against the interest of the majority. It can destabilize the power supply in the state. We know that the surplus from distribution must be ploughed into generation for capacity expansion. Otherwise, it will not be possible to meet the demand. If profits from distribution are skimmed off, the electric supply is bound to get into a crisis. The experience of Andhra Pradesh also shows this clearly.

LRS: So what actions are you planning?

Shri Joglekar: Regarding the Electricity Bill, it is actually trampling of rights of the states. According to Section 246(2) of Schedule VII, List III of the Constitution, electricity is a joint subject. By introducing the Bill surreptitiously at 11:00 PM and passing it without a debate in the Parliament, the Centre has encroached on the rights of the states. We have been discussing the matter with the government. We have been able to convince that the move is not in the best interest of Maharashtra. This has also been claimed by a group in Pune called Prayas through their independent study of the performance of private electric companies and Electricity Board (Pune) (see Table 1).

Table 1: Comparision of Private Companies and Electricity Board (source Prayas)

.We have suggested to them that since the matter is a joint subject, the State government can and must pursue the Central Government to amend the Act or enact a new law in State Assembly and protect the Electricity Board as a company having all the activities under one umbrella and protect the interest of power sector consumers of the State.

LRS: How do you react to the media claims that SEBs are a drain in the public exchequer?

Shri Joglekar: Our stand has been that MSEB is a viable entity to provide the service. We provide electricity at two Rupees per unit less to agriculture sector and poorer domestic consumers. Our current losses are Rupees 250 crores and the cumulative losses are only Rupees 600 crores. These figures are not very significant given that some years ago we had a cumulative surplus of Rupees 3,500 crores. We are also carrying out internal reforms to reduce the distribution losses. We try to assign such work on compassionate basis. Basically we have been saying that there is no need to privatize electric supply and the MSEB is perfectly capable of meeting the needs of electric supply.

LRS: How are the private parties trying to make profits from electric supply?

Joglekar: By primarily operating in the urban pockets with high density of electricity usage. For example, Reliance wants to operate in Vashi, Kalyan, Pune and a few other places. They have already acquired BSES, which operates in suburban Mumbai. They want to use the infrastrure of the MSEB. Tata Power, on the other hand, own some distribution network. They bought the infrastructure from Thane Electricity Board, which used to operate from Thane to Kanjur Marg area. They supply power to big customers only and not for domestic customers. As can be seen in the Table above, Tata power has only 10,000 customers but supply 8,605 million units, where as Pune MSEB has almost 100 times the customers but supply less than 3000 million units.

(The Godbole committee had recommended tying of urban and rural pockets together. For example, if you want to operate in Nagpur, you will have to provide electricity to Chandrapur and Gadchiroli also. Private players will not be very happy with this recommendation.)

LRS: How has the Dabhol debacle affected the MSEB?

Shri Joglekar: It has affected us directly. In the two years that the plant operated, we were obliged to buy power even at the outrageous rate of Rs. 7 per unit. In the two years, we acquired losses of Rs. 600 crores and Rs. 2,400 crore, respectively. Thus Enron/DPC have been directly instrumental in transforming MSEB from a enterprise with surplus to one in the red.