Power reforms: Govt says won’t switch off but the lights dim

The specific pressure on the UPA government was to rollback the June 10 deadline set for State Electricity Boards (SEBs) to unbundle — or separate their power generation, transmission and distribution functions. The Act pushed power reforms through three measures: competition in power distribution through an open access system, extension of the scope of captive power generation to cooperatives and associations, and forcing state electricity boards to unbundle their three functions. The Act also made it possible for a more rational power tariff system ending all cross subsidies. A National Power Policy and a Tariff policy were to be introduced to make it necessary for all states to set up regulatory commissions with scientific costing and pricing options. Those could move to the backburner now.

But the Congress says it has not not scrapped the June deadline but has merely extended it. ‘‘Our commitment to power reforms will continue,’’ Jairam Ramesh, one of the authors of the CMP, told The Indian Express. The UPA stresses that the CMP clearly stated that private investment in generation and distribution would be encouraged. Ramesh said: ‘‘Review also means that it will be within a 45-to-60-day timeframe after which we will go back to Parliament. Several states had their concerns including the Congress-ruled Maharashtra. It is only fair that their views are taken into account. And it is a bogus claim that power reforms only begin after unbundling, there could be other models.’’

The relaxation of the deadline and ‘‘review’’ of the Act could affect private investment in the power sector, which has not taken off because of the ill-health of SEBs. The Act took two years at the drafting stage when the NCAER held consultations with various interest groups before submitting their report. The Ministry of Power then introduced the Bill in Parliament in August 2001 when BJP’s Rangarajan Kumaramangalam was the minister. It was then sent to the Consultative Committee of Parliament, which suggested 120 changes. Nearly 90 were incorporated in the Bill after which Parliament debated the bill for nearly a year and a half before it was passed.

Even when it was passed in April, 2003, the Congress had got an undertaking from the BJP-led government that any pending amendments in the Act would also be passed if the party so desired.

As a result, in December 2003, at least five amendments were made to the Act especially with Congress’ Kapil Sibal specifically demanding some changes in the Act.