Politics of power
The WB prescription to the malady afflicting the power sector was simple. The first medicine was unbundling the electricity board (APSEB). The second...
The WB prescription to the malady afflicting the power sector was simple. The first medicine was unbundling the electricity board (APSEB). The second was tariff hike by 15 percent every year. Privatising the generation and distribution systems was the third and last step.
Astrange conspiracy has been unfolding for some time. Or so it looks. It is a case of the incumbent helping the successor by attracting the wrath of the people. If the Congress retains power and the same person at the helm after 2014, Kiran Kumar Reddy will be the luckiest politician. He will not have to hike power tariff for five years in his next term. He will be left with a huge revenue surplus. If it is Chandrababu Naidu or YS Jaganmohan Reddy who is going to grab power, he will be beholden to Kiran for the largesse, just as YS Rajasekhara Reddy was able to cheerfully implement his pet policy of free power to the farmers without having to impose power cuts or increase tariff. Whether or not the report submitted by the Comptroller and Auditor General of India (CAG) is Bhagawat Gita, Koran or Bible, it has gained in credibility in recent times, thanks to erudite and uncompromising presiding officers like Vinod Rai.A Principal Accountant General of Andhra Pradesh Vani Sriram revealed that the CAG had faulted the State government for failing to ensure utilization of allotted funds, resulting in staggering escalation of project costs without achieving desired benefits. While the caustic comment may be valid in the case of irrigation and other projects, it is more so in the case of power projects. The power story in AP is both interesting and intriguing. One would get a strong sense of déj� vu while watching the latest developments. It was the same place, the old MLAs quarters, that YSR had chosen in the second week of August 2000 to launch indefinite hunger strike against power sector reforms and power tariff hikes enforced by the then TDP chief minister. YSR and the nine Left parties jointly mounted an unprecedented movement against the government headed by reforms-savvy Chandrababu Naidu. The TDP MLAs also have chosen the same place for their fast on Tuesday. The Left parties have regrouped themselves and launched their struggle in right earnest. To correctly guess what would happen now, it is important and instructive to know what had happened then. Naidu was keen on courting Microsoft king Bill Gates, bringing Bill Clinton to Hyderabad and getting a respectable place for Hyderabad on world map. He was a dreamer and had always the big picture before him. He also wanted to prove that he would be the firstA chief minister to implement reforms. He offered his State for the World Bank (WB) for use as a laboratory and prove to the rest of India that its model of development works wonders. The WB prescription to the malady afflicting the power sector was simple. The first medicine was unbundling the electricity board (APSEB). The second was tariff hike by 15 percent every year. Privatising the generation and distribution systems was the third and last step. Naidu dutifully unbundled the APSEB into two: GENCO and TRANSCO. Only then did he get the first installment of the WB loan (Rs 1000 crore). In his nine years he hiked the power tariff almost every year, though not as steeply as the present chief minister did. Since he wanted industries to perform well, his focus for revenue mobilization was on domestic and agriculture sectors. There was 30-50 percent hike in domestic power and about 60 percent in agriculture (Rs 250 per horsepower to Rs 425). 'Cost to serve' and 'quality power' were part of the WB vocabulary with which dynamic, pro-reforms bureaucrats like Anil Kumar Kutty were well versed. The increase in industrial power tariff was just 5 percent. It was in those heady days that the TDP leader said that there was need to shift people from agriculture to other sectors since the former had become highly undependable. Though what Naidu said was right, the language and the context were wrong, giving scope to misunderstanding by the people and misinterpretation by political rivals. The movement became intensive, rising to a crescendo on August 28, 2000, culminating in police firing on the agitators who were marching to the Assembly resulting in the death of two persons. That was a great shock to Naidu and a greater disaster for the WB which had hoped to replicate the AP model, if successful, in other States. With theA Kanungoo Committee reporting around that time that reforms in Orissa had failed miserably, the WB had to beat a hasty retreat. With the setback suffered on the reforms front, Naidu lost interest and did not bother about the performance of the DISCOMsA which were losing heavily. According to his critics, the idea was to allow them to incur unreasonable losses and then privatise them citing losses as the reason. The mood of the people was so sullen and suspicious that Naidu did not dare to resume reforms.A But he concentrated on revenue side as a good administrator. Revenue collection drives brought excellent results for the government though it alienated people. Naidu tried to reduce transmission and distribution losses. Theft cases were registered against consumers to prevent pilferage. Revenue recovery cases were filed in thousands. Naidu brought an upright and efficient officer, Rachel Chatterjee, as chairperson of TRANSCO. All the parameters had improved so well that CRICIL rated AP as the number one State in the country for three consecutive years (2003-2006). Any State which gives power free to any section of people is given zero marks by the rating agency in that category. Still, AP stood first since it was doing exceedingly well in other parameters like generation, performance of regulatory mechanism, transmission and revenue collection. States like Gujarat and DelhiA found themselves in second and third places, respectively. The rotA set in 2007. And how? It was the year when the State had gone into election mode. There had to be no power cut and no tariff hike. The YSR government was purchasing power from outside at Rs 10- Rs 15 per unit. Undue benefits were extended to private power plants. For instance, BPL which had been given permission in 1995 did not go into production till 2003 when Rachel took punitive action and cancelled the permission. Raechel was overruled and her decision was reversed. The APSERC was pressurized into accepting the decision. The Congress, in its election manifesto in 2004, promised to review the PPAs (Power Purchase Agreements). The YSR government ordered a CID enquiry. But the report submitted in 2007 was not acted upon. Coal at that time was imported at an exorbitant rate of Rs 9000 to Rs 10000 per ton as Kiran Kumar Reddy has rightly mentioned on the floor of the House on Tuesday. (Now the coal is purchasedA from Indonesia at Rs 4,900 per ton). Rachel was shifted out of TRANSCO when she objected to many of the decisions. In the name of revision of tariff, a burden of Rs 1400 crore was imposed on the people in 2010-11, Rs 641 crore in 2011-12 and Rs 4,269 crore in 2013-14. Now the government has proposed an additional burden of Rs 12, 723 crore. Kiran has agreed, after a heated debate, to reduce this by a couple of hundred crores. Apart from the tariff hike, there is FSA (Fuel Surcharge Adjustment) levied since 2008. The total FSA imposed was Rs 1,649 crore in 2008-09 and Rs 1,481 in 2009-10. Thankfully, the High Court hadA stayed the implementation of these two measures. But the FSA of Rs 625 levied together in 2010-11 and 2011-12 is being collected since 2012 September and will continue to be collected till September next year; 2013-14 has been the most merciless year for consumers. The first quarter saw a rise in the burden by Rs 1, 740 crore which was collected in April, May and June, 2012. The pound of flesh in the second quarter was Rs 753 crore. The collection of this amount, which was delayed due to procedures, will start next month. For the third quarter, the Government has proposed Rs 1,068 crore. A decision will be announced soon on this; it means, from AprilA onwards we will be paying the regular tariff decided by the APSERC and the installment of the FAS for 2010-11 and 2011-12 besides the installment of FAS for the second quarter of 2012-13. The FAS for 2013-14 will not be collected separately. It will be merged in the tariff. The industry is worst affected. There is power cut for industrial sector for 12 days in a month. The R&C measures are in force. The industries should not use more than 60 percent of the connected load. Because of these stringentA measures the revenues are bound to go up and there would be proportional growth in the intensity of popular anger. The Congress and Kiran Kumar Reddy will need a lot of luck to survive the engulfing inferno. But then,A luck has been favouring Kiran Kumar Reddy. He has been extremely fortunate to be there at the top even after more than two turbulent years. The Opposition now is not as united as it was in 2004. YSR was leading the movement and all the nine Left parties were with him. Except the BJP, there was no Opposition party which was outside the movement against the TDP government. YSR was never in power before 2004 (except for a brief tenure as minister in Anjaiah and Bhavanam Venkatram Cabinets). He had no record of not being able to implement what he promised.A People trusted his word. His walkathon was a resounding success. The Opposition now is divided. The Left parties have lost much of their appeal. The TDP is going solo. Its leader has been walking towards the East. The YSRCP and the TDP cannot work together. So the tempo that was witnessed 14 years ago is not there now. If Naidu can abandon his listless walking, come back to Hyderabad and try to achieve unity with the Left, he might succeed in bringing considerable pressure on the government to reduce the burden on the common man. That way he may be able to redeem himself. But whoever is the person that the lady luck smiles at after 2014 election results are announced, he will have the benefits of the hard decisions of the present government to enjoy. The power generation is bound to go up. Two units of 800 MW eachA being built by GENCO at Krishnapatnam are going to be commissioned soon. The Bhupalpally plant of 600 MW also should start production in a year's time. A 500 MW unit of Hindujas may be launched at Vizag in a few months. Though the present is miserable, the future looks rosy. Next summer, during the polls, will be far better than this year's. If Kiran could manage to survive the present heat, his 'power' problem would be as good as solved (He will not lose power on account of electricity). But can he?