KPCL disinvestment soon: Krishna

BANGALORE, JULY 20. The Government has decided to undertake disinvestment in the Government-owned power generation utility -- the Karnataka Power Corporation Limited (KPCL) -- shortly, according to the Chief Minister, Mr. S.M.Krishna.

In his speech on Thursday at the 30th anniversary celebrations of the KPCL here, which was read out in his absence, Mr. Krishna said disinvestment was a natural off-shoot of the reforms in the power sector.

Despite forming the KPCL in 1970 to bring about "a commercial outlook and lessened Governmental control", the legal and social framework had prevented both the KPCL and the Government from reaping the benefits of corporatisation. But, since the present- day economy was rationally driven and called for "democratisation of the power sector", disinvestment was the "ultimate task" for the future.

Acknowledging the KPCL employees' reservations about the process, Mr. Krishna pointed out that disinvestment would "bring about greater people participation, transparency and ability in the system".

He assured the KPCL employees that the process of reform was in their own interest and the larger interest of society. Though there would be transition-period difficulties, "completing the reforms will ensure long-term health of the organisation," he added.

Governor's plea

The Governor, Ms. V.S.Rama Devi, called for more research on the long-term effects of nuclear power. She pointed out that nuclear power would help meet the State's ever-increasing demand for power.

Recalling a visit to the Kaiga Nuclear power plant in the Uttara Kannada region, the Governor wanted scientists to allay the apprehensions of people regarding nuclear waste and its disposal.

Stressing that the State should focus on harnessing hydel power as that was the cheapest available option, she however regretted that hydel stations invariably submerged forests and large tracts of land. An alternative solution had to be found, she felt.

Referring to thermal power, Ms. Rama Devi said that fly ash could be combined with cow dung to be used as manure. "There has to be coordinated work by the departments of Power and Agriculture for developing this as an alternative manure for farmers' use," she added.

New role

Reiterating the gist of the Chief Minister's speech, the Deputy Chairman of the State Planning Board (SPB), Mr. Jairam Ramesh, said that the KPCL had to become the "venture capitalist" of the power sector. "The KPCL has to become a project developer, bring projects to commercial fruition and then hand it over to the private sector which will run those projects," he said.

For that there had to be a change in mindset. If the KPCL succeeded in achieving that, it would not find it difficult to supply at least 1,500 to 2,000 MW of the nearly 3,000 MW of additional power that the State would require in the next five to ten years, Mr. Ramesh said.

He lashed out at both governments and regulatory authorities for their contradictory and combative methods of functioning. He regretted that governments had never had "good experiences with regulatory bodies in any sector, be it in the sectors of telecom or power... Neither the Government nor the regulator has fully understood each other's role, and they invariably use the media to air their views on each other," he said.

The Deputy Chairman hoped that Karnataka would not face the situation that had befallen the power sector in Andhra Pradesh. "The essence of regulation is that each side respect the other. The Government has to respect the autonomy of the Regulator, and the latter has to understand its responsibility. The process of tariff fixation has to be depoliticised," he stressed.

Mr. Ramesh also explained why reforms were essential for the future financial health of the State power sector. "At present 60 to 65 per cent of the State's revenue deficit is from the power sector. While the Karnataka Power Transmission Corporation Limited (KPTCL) owes the KPCL around Rs. 1,300 crores, the former is owed a few hundred crores by other Government agencies and the cycle goes on." That money was better spent on primary health and education, which was why the Government wanted to bring down the revenue deficit to zero.

Mr. Ramesh gave the reasons for seeking World Bank (WB) aid. "Between themselves, reforms in the KPTCL and the KPCL will require Rs. 9,000 crores over the next five years. The WB money -- 70 per cent loan spread over 20 years and 30 per cent grant -- is our safety net for those reforms," he said.

`Recipe for disaster'

Referring to the State's future power requirements of nearly 3,000 MW, Mr. Ramesh categorically negated the utility of fuel- based projects, stressing that they were non-viable and a "recipe for disaster". Citing the on-going Tannirbhavi project as an example, he informed the KPCL Managing Director that the project would "suck away" Rs. 60 crores of the KPCL's monthly revenue of Rs. 300 crores. The judicial decision in this regard -- for the Government to provide escrow cover -- had to be obeyed though it made "no economic or technical sense", he added.

Stressing that natural gas was a viable option for power projects, Mr. Ramesh sought a balance between hydel and thermal projects, and advocated the use of imported coal.

He also said that universal metering was absolutely critical, "at present, the KPTCL claims T&D (transmission and distribution) losses to be 42 per cent. Since only 37 per cent of all energy is presently accounted for, universal metering can even make T&D losses shoot up to 50 per cent," he said.

He hoped that there would be universal metering in the next three or four years.

The KPCL Managing Director, Mr. Jothiramalingam, the Energy Secretary, Mr. P.S.S.Thomas, and the Energy Minister, Mr. Veerakumar Appaso Patil, were present.

Units 1 to 4 of the RTPS were given ISO 9002 certification by the Bureau of Indian Standards on the occasion. The financial closure of Unit 7 of the RTPS is scheduled for July 21.