The Congress-led United Progessive Alliance government in its just released CMP has done the unexpected vis a vis power sector reforms. The Manmohan-Chidambram combine which was expected to resolve the nitty-gritty's of the Electricity Act 2003 has instead decided to review the entire Act itself. The Electricity Bill, which had had a tumultuous 3- year journey in the Parliament, was considered a watershed to usher in the next generation of power sector reforms -the rock-bed to achieving the 8%+ GDP growth over the next few years. The act, by itself, was never going to be enough to undo the rot in the sector but a comprehensive review is bound to set the process of reforms back by a few years.
The immediate casualty has been doing away the June 10 deadline for states to unbundle their SEB's. Free power, as the recent elections showed, has once again become a ticket to power and the states are already in the race to outdo each other. With Andhra and Tamil Nadu doing the U-turn jittery investors are bound to hold back till such time as the review is complete. Despite the Prime Minister's assertion that free power could only be a one-off stand in adverse situations, political expediency would necessitate national and state level parties juggling state finance figures to justify free power for farmers. Mass leaders, cutting across the political spectrum, take immense pride in flaunting of their connections-with-the-soil and with the national level Congress party storming to power in Andhra on the ticket of free power the storm is only set to brew. Tata Power, the country's leading private sector power utility, has already declared that it has no problem with free power provided the state government make explicit provision for the same in the state budget. However, given the financial position of the states the proviso is unlikely to happen in the near future, in effect stalling the little progress the sates have made with reforms in the sector.
The CMP's intent to put the Act on the block has come at a time when the country is reeling with a peak power shortage of nearly 15% and 'energy billed on metered basis', despite substantial efforts, continues to be less than 50%.Power cuts average nearly 10-12 hours in Uttar Pradesh (and most other states) where consumers are already considering taking the utility to court. With the CMP equally short on energy security, it meets just 3 lines in an 11 page document, the hopes that power cuts would soon be a thing of the past will remain on the realms of fantasy, at least for the time being.
The only redeeming factor for the power sector in the UPA's CMP remains the coalition's commitment to increased private sector participation in generation and distribution as also the reiteration that subsides will be made explicit and through the budget. How the government hopes to achieve the same in the absence of an overall policy framework remains an unanswered question. The Act was a mammoth process in consensus building and the UPA, rather than a fresh start, would be well advised to press ahead on the framework with modifications as need be. The country's ambitious target of Power for All by 2012 needs immediate and substantial investments in generation, transmission and distribution services. Strengthening of the regulatory framework, ensuring a level and transparent playing field, specially in the transmission business, binding provisos for explicit budgetary subsidy and effective consumer grievance redressal systems are issues mandating attention in an act that has otherwise been hailed by industry, investors and consumers alike. With BiPaSa-- Bijli, Paani and Sadak-- now the accepted electoral planks the political harvest would be their to reap for the UPA should the Power reforms materialize akin to the Golden Quadrilateral Project. Dr. Manmohan Singh, the original reform man who began it all, could translate policy into action in no better way for the millions than freedom from the dark.
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