Former MP slams government’s move to privatise power sector

Ramadass urges Puducherry government to withdraw privatisation tender and express inability to ursue proposal through a special Assembly resolution

September 30, 2022 08:21 pm | Updated 08:21 pm IST - PUDUCHERRY

Former Member of Parliament M. Ramadass has appealed to the Puducherry government to withdraw the electricity privatisation tender and express inability to pursue the proposal through a special Assembly resolution.

In a statement, Mr. Ramadass said a dispassionate analysis of the situation where the employees, political parties and the public have launched protests against privatisation should convince the government to withdraw the tender notice, convene a special Assembly session and inform the Government of India of the inability of the Puducherry government to proceed with the process of privatisation.

“Proceeding further in the direction of privatisation may only invite legal litigations and public furore,” he said.

Terming the tender that paves the pathway for privatisation of Electricity Department (ED) an ill advised and unjustified move, Mr. Ramadass said the development reflects the obdurate attitude of the Central government and the complete failure of the apathetic Puducherry government led by Chief Minister N.Rangasamy to protect the 112-year-old property of the people of Puducherry.

“The tender notice leaves many questions unanswered, especially what the criteria was for pegging the bid security amount at ₹27 crore. Does it portray the total value of the shares of the distribution company or the value of both the shares and the total assets of the Department? Who will assess the value of assets? Will the assets be valued at current market price or at the original price at which the asset was created 50 years ago or 20 years ago and who will be responsible for the deposits made by the consumers to the ED?,” Mr. Ramadass asked.

Electricity being a public good like water, road, is a critical input for the promotion of public welfare and it should have been his prime and bounden duty to ensure its continued public distribution at all costs. The Chief Minister should have prepared a detailed and cogent case against privatisation based on empirical and historical data, discussed it in a specially convened Assembly Session, passed an unanimous resolution against privatisation as done by previous government and told the Centre that the vibrant Electricity Department should not be privatised. By not doing so, the Chief Minister has voluntarily surrendered and sacrificed the public interest of Puducherry, he said.

According to Mr. Ramadass, privatisation was not a policy as contended by the Lieutenant Governor, but only a method of reducing or wiping out losses in a public concern. Privatisation of ED is not warranted on several grounds, primarily as it is not afflicted by grave problems of losses in the distribution of electricity, and, on the contrary in the three-year period from 2017-18, earned a profit of ₹49.18 crore.

Since there is no generation of electricity, the question of operational and financial inefficiencies in generation, higher purchase cost, requirement of bulk investment from the private sector or government which are cited as critical concerns for privatisation do not exist in Puducherry. Normally, 80% of losses occur in Territories or States with power generation utilities which means that Puducherry does not encounter such a problem. The Aggregate Technical and Commercial (AT&C) loss is much lower than the 15% prescribed for privatisation, Mr. Ramadass said.

The two major objectives of 2020 Electricity Bill, namely, protecting the interests of consumers and providing access to quality supply at cheaper tariff are more than achieved by ED. The objective of ensuring healthy growth of the power sector is also accomplished as the electricity purchased made a quantum jump from 96 Million Units (MU) in 1970-71 to 3,322 MU in 2019-20 denoting 35 fold increase. The quantity of electricity sold has grown from 82.8 MU in 1970-71 to 2,830 Mu in 2019-20 implying an increase of 34.2 times .

The government investment on electricity increased from just ₹0.22 crore in 1970-71 to ₹11.58 crore in 1990-91 and it escalated phenomenally to ₹1,736.71 crore in 2020. In the current Budget, an allocation of ₹1,697.33 crore has been made. The per capita consumption of electricity is now as high as 2031 KWH, one of the highest in India and the cost per unit is perhaps the lowest in the country.

It is pertinent to ask whether all that was built in the last 65 years should be handed over to a private player on a platter at a throw away price. He also questioned the rationale for privatising a profit-making and robust enterprise without examining the facts and figures and diagnosing the real situation.

According to Mr. Ramadass, a private player is not even an imperfect substitute to a strong department. A potential consequence could be a two way exploitation — of consumers by hiking existing tariff under some pretext, and of employees by wage cutting and retrenchment policies. By maximising his profits and filling his coffer, he may proclaim to be more efficient but at a heavy loss of public welfare.

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