N0. 21 / 2018 / ODISHA 13-08-2018
Shri Naveen Pattanaik
Chief Minister
Odisha
Bhubaneswar
Sub: Memorandum on behalf of All India power Engineers Federation on Odisha Power Sector to stop Privatization, Franchisee and to oppose Electricity Bill 2014 in Parliament
Respected Sir,
As you are aware Odisha was the first state to introduce reforms in Electricity Sector in the 1995 & Odisha was also the first state to privatize Electricity Distribution in the year 1999. So Odisha understands better the ill effects of reforms and privatization of electricity sector. Till today, no state other than Odisha and Delhi have privatized Distribution sector. Though many states have introduced Franchisee model and have experienced it's miserable failure.
For ready reference, we put forth below the salient features of Odisha’s tryst with Reforms, Privatization and also the ugly face of proposed Electricity(Amendment) Bill 2014 .
2. With the enactment of Odisha Electricity Reforms Act 1995, the Electricity Sector of ODISHA was subjected to sweeping changes. The OSEB was disintegrated with formation of separate companies for Generation, Transmission and Distribution Companies (4 nos.) which were later privatized , CESCO in 1999 (AES) and WESCO, NESCO and SOUTHCO in 2000 (Reliance). The primary objective of reforms was told -
·To make the sector financially viable
·To reduce Distribution losses (AT&C) to acceptable limits
·To get investment from Private sector for infrastructure development
None of these objectives are nowhere near achievement as the financial losses mounted from Rs 300 Crores in 1995 to Rs 6500 Crores in 2018, Almost zero investment of Private capital (except buying 49% equity amounting to around Rs 230 Crores) and AT&C losses almost at 40% barring few cities .
3. The devastation by super cyclone in 1999 in central Odisha and by Phailin in 2013 in Southern Odisha completely exposed the private companies and their resilience and intent for restoration of power supply. In both the cases it was left to the State Govt to intervene and provide power to the people. While AES left on its own in 2001, Reliance was driven out in the year 2015 by OERC for serious non performance and non compliance.
4. After exit of AES, the franchisee model was introduced in some pockets of CESU wef. 2012 with the mandate of 100% metering, reducing AT&C loss to 15% by the end of 5th year ,making capital investment for providing AB cable in 20% of LT network and replacement of damaged poles @ 3% per annum.
By the end of five years of franchisee model, none of these parameters are nowhere near the target. Franchisee model has not only failed in Odisha but also almost everywhere throughout India.
5. It is established that, both Privatization and Franchisee model have failed miserably and pushed the sector to financial bankruptcy by not acting to fulfill any of the contractual parameters. It is lucky that Centre as well as State Govt. have infused funds for new infrastructure and Rural Electrification for which the sector is able to breathe. But due to huge AT&C loss, the sector is even unable to pay for the power purchase cost and arrear is mounting to spiraling heights. So left with practically no fund, the maintenance of network has taken a huge beating . This coupled with severe shortage of staff has taken a serious toll on maintaining power supply and is the primary reason for frequent power failure.
6. The primary lessons of failure and the writing on the wall make one thing very clear that there is something seriously wrong with the policy. But instead of reviewing the policy, the process of reprivatization has been initiated and the Franchisees are being given extension.
7. The story of Generation and Transmission is also not that rosy. OHPC has not been able to add any new project to it’s kitty during these 22 years and many projects of OPTCL are not able to deliver their ultimate objective of providing quality power to people as the down under 33 KV and 11KV networks are not coming up . Even OHPC has not been able to keep it’s existing units ready for generation. The entire electricity sector suffers from serious management contradictions and lack of robust organization culture. The HR policies have become the worst, particularly by the Reliance managed DISCOMS. They have by passed rules and regulations to promote their chronies in violation of seniority. Unduly extended the training period of engineers and not giving them seniority from their date of appointment. Instead of being policy driven organisations, it has become prerogative dictated. One of the examples of lack of seriousness is the appointment of part time authorised officers in SOUTHCO, NESCO and WESCO for over three years and the topmost management of the entire sector being vested on one person. Due to different organisations , the integrated planning is missing for which there is an urgent need to amalgamate Generation , Transmission and Distribution companies to one entity namely OSEB ltd. As done in Kerala and Himachal Pradesh.
8. The primary reasons for financial loss i.e. absence of metering and theft of electricity has taken back seat. There was no attempt for 100 percent metering and strengthening ways and means for check of theft of electricity. Focus on these two aspects would have made the sector turn around.
With no investment coming in Electricity Distribution sector and complete failure, rather lack of intent to curb theft and reduce AT&C loss, the Government is now trying to shift the focus through Electricity Bill 2014, which cleverly sets aside the investment part to Government or Government companies in network and metering including the responsibility of curbing theft and making private players to reap benefits by only supply of electricity from pole to house. This is primarily what Electricity bill 2014 intends to achieve by separation of Carriage (Distribution Network) and Content (Supply of electricity) . Is it not about nationalization of losses and privatization of profits? The provision of multiple licensing for supply of electricity in one area will require huge investment in special type metering and IT infrastructure shall have to be done by the govt. distribution company. As per reports in order to put in place similar infrastructure in UK it took around 10 years with an investment of 750 million pounds. This investment shall obviously be loaded on the consumers only. The private suppliers will obviously operate in cities and serve high end consumers and the onus of supplying to rural and BPL consumers will obviously rest on the govt. supply company which must have to operate in every supply area. With exit of high end consumers to private suppliers the cross subsidy will take a serious beating. This will not only hamper the interest of poor consumers but financially cripple the government supply company from the beginning. Neither any data is available to study the impact of the proposed legislation nor any policy frame work available for implementation of the bill when it becomes act.
Being seriously concerned with the abject failure of first phase reforms in Electricity sector ( 1995 to 2018) and genuinely apprehensive about the sure failure and adverse effects of the 2nd phase reforms through Electricity Bill 2014,the Engineers working in state power sector, vehemently objects the attempt to pass the bill in Parliament without any discussion with the leaders of Engineers Associations and Unions.
9. All India Power Engineers Federation (AIPEF) thus urge upon your good office that --
(1) The Management of Distribution sector should be immediately taken over by the state government as the performance under the management of OERC is deteriorating. Further Regulator should not do day to day management.
(2) As a first step, all the distribution companies should come under one umbrella with a full time engineering Chairman cum Managing Director with experts as Directors in the BOD should be immediately appointed to manage the Distribution sector.
(3) The state Government should review the Odisha Electricity Reforms Act 1995 and study the reasons of failed objectives by an commission of experts and take immediate steps for reunion of all state power sector entities to form one entity namely OSEB Ltd. as done in Kerala and Himanchal Pradesh.
(4) Providing special fund for 100% metering and maintenance of lines and substations.
(5) Review of present policy to arrest theft of electricity and introduce new measures.
(6) Creation of new posts as per yard stick and filling up of vacant posts in order to provide proper service to consumers
(7) Stop contractual appointment against regular posts, payment of equal wage /salary to contractual employees for equal work and regularize their service..
(8) Introduction of special pay structure (higher than state govt. as is in other states for power sector) for power employees and engineers providing emergency service in line with the provisions of other states.
(9) Time bound promotion for Engineers
(10) Reintroduction of Old Pension scheme existing before 2005 and inclusion of all Employees and Engineers in the scheme recruited after 2004.
(11) Providing regular job to one family member of employee succumbing to death during service under rehabilitation scheme.
(12) Providing cash less medical treatment to employees and their family members.
Thanking you with regards.
Yours faithfully
Shailendra Dubey
Chairman