The Hindu Business Line : Errant SEBs

Much as New Delhi might plan reforms in core sectors of the economy, some problems appear far too endemic to permit of efficient change. Thus the Centre may solicit investments, set targets for the next decade, even legislate for speedy delivery of electricity to every citizen by the end of the present decade. But if recent events at the State level are any indication, something more than planning and good intentions will be required to match precept with practice. After more than five years of reforms in the power sector, the age-old problem of erring State electricity boards is threatening to stymie New Delhi's goal to reach electricity to the vast majority.

Barring a handful, State electricity boards across the country have been unwilling to follow the basic rules of the new tariff policy agreed to last year. One of these stipulates that the power utilities should file Annual Revenue Requirement (ARR) petitions to the State Electricity Regulatory Commissions (SERC) concerned. These petitions kick-start the process of tariff revision for every consumer category, keeping in mind the viability of the SEB. Of the 29 SEBs, only five had sent in their ARR petitions by the March 31 deadline; ten States sent it in after the deadline. Some States — Maharashtra, Tamil Nadu and Gujarat, among them — have simply ignored the stipulation. It is significant that the most industrialised States count among the errant; it is no less significant that West Bengal has complied, considering that it is ruled by the Left, whereas Maharsahtra, ruled by the party of the current policy-makers, has not.

It is a serious matter when the party in power in New Delhi is unable to get its State-level administration to set compliance standards for others. The most critical change in the power sector, the Electricity Act, was legislated in 2003 during the BJP-led government; the new tariff policy came last year, with the UPA in power. The SERCs are the products of both. Yet State governments from both parties have recklessly gifted away power to favoured consumers — Scheduled Castes in Punjab and farmers in Andhra Pradesh, for instance — in contravention of the rules for subsidies in the notified tariff policy.

This errant conduct of SEBs underlines the central problem of the power sector; lack of proper governance and conflicting interests at the Centre and the States. Policies may appear efficient in New Delhi, and Parliament may legislate but as long as distribution of power remains in the hands of State-run utilities, the central concern that policymakers will have to face is how to raise the resources to enhance power generation capacity. India has a per capita power availability of 526 units a year compared to China's 1,247 units; the Centre wants that to rise to 1,000 units by 2012. Given the disconnect between economic policy and populist rhetoric, and between the States and the Centre, the target seems almost impossible to attain.