Seeing the light

The World Bank has very little option but to take a tough line on Haryana's stalled power sector reforms. It is most unfortunate that thre...

The World Bank has very little option but to take a tough line on Haryana8217;s stalled power sector reforms. It is most unfortunate that threats to suspend loans and take legal action have become necessary. Common sense should have told Om Prakash Chautala to honour agreements and that it is in Haryana8217;s interest to complete half-finished plans to restructure the Haryana State Electricity Board.

An improved power situation is what stands in the way of rapid economic growth and it has long been recognised that no improvement is possible without radical changes in the set-up. However, Chautala has made it clear since he came to office in 1999 that he has no intention of taking the next steps, chiefly giving appropriate legal instruments to new power companies, formed in 1998 to replace the HSEB, to enable them to carry out their responsibilities for the generation and distribution of power. This was one of the benchmarks under the terms of the WB loan agreement. The state has also missed the deadline for raising agricultural sector power tariffs. These failures to perform as agreed have left the power sector in suspended animation, as it were, with neither the old failed system nor a new promising one fully in place.

Chautala, never committed to power sector reforms, could not have chosen a better way to kill the process. If the new Haryana Vidyut Prasaran Nigam and two new power distribution companies do not soon begin to deliver plentiful, reasonably priced and uninterrupted supplies of power to all categories of consumers, public disenchantment with the reform process is bound to set in. Were that to happen it will be twice as difficult as it is today for political leaders to face down lobbies and vested interests who oppose reform. Financial constraints made the predecessor regime of Bansi Lal see the light and begin restructuring.

The drying up of World Bank funds may galvanise Chautala to action or so the bank hopes. If the bank finally withdraws from Haryana it will certainly lead to a loss of confidence in the market and make it very difficult and costly for the state to raise what it needs by way of fresh investment for the power sector. Chautala will no doubt try and shift the blame to the bank but there should be no mistake about who the real culprits of the power crisis are. Political shortsightedness and corruption are holding Haryana to ransom. It is time to put a stop to them.

With a firm Assembly majority, the government has no excuse for dodging decisions which may be politically unpopular especially among coddled farmers. Power tariffs must gradually be brought in line with costs and a beginning made now. With the right kind of political leadership it is possible to make farmers and other consumers understand that free or below-cost power is neither equitable nor economically feasible. If Chautala persists in a course of action that will cripple Haryana8217;s economy, the Centre should step in and make him see reason. It would have every right to do so because as a member of the NDA he is bound to try and further reforms. More than that, the Centre is party to the agreement with the World Bank and must do everything possible to ensure it is not breached.