People's Democracy

THE Delhi Vidyut Board (DVB) recently submitted a proposal to the Delhi Electricity Regulatory Commission (DERC) for an upward revision of the power rates in the capital. The increase in rates is to ostensibly cover its operating losses that are currently around Rs 1000 crore.

As the DVB itself admits, these high losses are due to the huge transmission and distribution (T&D) losses, which are currently around 50 per cent, while the figure was 22 per cent in 1992-93. If the losses on account of unpaid bills are added, the total loss comes to around 55 per cent. However, since the DVB is unable to curb the theft and since the Delhi government has little political will to punish the defaulters, it is trying to penalise the honest consumers. In its computation, it has visualised a reduction in T&D losses at only 2 per cent per annum, which is unacceptable.

It is true that, in the long run, a tariff guideline should have some relation to the cost of delivering electricity to the consumers. But this certainly does not mean that consumers should subsidise the theft of power or the managerial inefficiency and technical incompetence of electricity suppliers. It is because of this that the Communist Party of India (Marxist) is totally opposed to the inclusion of these avoidable losses in computing the true price of electricity.

At the same time, the figures shown as future losses are also high, as the DVB has assumed unrealistic figures for the growth in demand. With the shutting down of a large number of industries on account of pollution or their location in non-conforming areas, the demand in 2001-02 will actually be much lower than that projected.

According to the CPI(M), the T&D losses are occurring primarily because the industrial and commercial establishments and well-off colonies are stealing power. The low-end consumers cannot be penalised for such thefts through increased tariffs. The DVB’s own internal studies show that the poor are not responsible for the bulk of electricity theft in Delhi. Hence, to burden them with such increases as proposed by the DVB, is unjustified and wrong.

Further, the DVB’s proposals seek to heap maximum burden of the increase on those who consume the least of electricity. The proposals seek to increase the rates for those consuming 50 units by a whopping 200 per cent, for those using 100 units by 150 per cent and for those consuming 200 units by 100 per cent. In contrast, far less increases have been suggested for bigger consumers. The increase works out to 64 per cent on 600 units and 59 per cent on 800 units. This lays bare the deeply anti-poor nature of these proposals which amount to asking the poor and middle class of Delhi to pay for the theft committed by the rich.

It is with these facts in view that the CPI(M)’s Delhi unit has demanded an outright rejection of the huge hikes proposed by the DVB. It said the only sections which can be asked to pay more are the richer ones who are consuming huge amounts of electricity.

As for the tariff determination principles for 2002-2006 submitted by the DVB, the CPI(M) says these should be delinked from the current exercise that focus exclusively on the tariff increase for 2001-2002. The tariff principles for 2002-2006 embody important issues that need to be addressed separately. This is all the more relevant in view of the proposal to privatise the DVB. While stating its opposition to any restructuring aimed at privatising the power sector, the CPI(M) believes that tariff principles have no meaning without public scrutiny of restructuring and privatisation proposals. According to experts, privatisation will lead to a 75 per cent increase in tariffs over and above the totally unjustified increases suggested in the DVB’s current proposals. The people of Delhi will not be able to pay so high a cost for power.

The CPI(M) also drew attention to the impact of the power sector’s restructuring and privatisation that has led to the following:

a). High tariffs due to revaluation of assets before privatisation; consequently the capital servicing charges were imposed again.

b). All losses are being borne by the state owned Gridco. The Orissa state electricity board (OSEB) is currently bearing greater losses than earlier.

c). Private generation companies owe an outstanding amount of Rs 450 crore to the state owned Gridco.

d). There has been no improvement in the situation, no lowering of the T&D losses and no increase in revenue realisation.

Yet, unfortunately, the Delhi government is proposing to implement the same bankrupt policies in the national capital. This will lead to very high rates of power, without any possibility of reducing the outflows from the state exchequer. Nor is the recent separation of generation, transmission and distribution likely to lead to any improvement in the performance of the resultant entities. Private companies will take over distribution only if all current losses are borne by the state, power is given to them at assured prices and the assets are transferred virtually gratis. This is precisely what the Greater NOIDA’s private power company has done. It is getting power from the Uttar Pradesh state electricity board (UPSEB) at subsidised rates (Rs 1.40 per unit against the UPSEB’s rate of Rs 2.00 for supply), collecting high tariffs while running up Rs 180 crore of unpaid debts to the UPSEB. Inviting what they call independent (read: private) power producers (IPPs) to generate power will also mean that the power supplied to Delhi will have a very high cost and lead to problems similar to those being encountered in Maharashtra.

The CPI(M)’s memorandum has also raised issues that are not covered by the DVB. The DVB has created two kinds of consumers. One set of the consumers live in well-off colonies, which it caters to directly, and another set lives in poor colonies and jhuggis that are being handed over to private contractors. In the latter case, contractors are charging arbitrarily for meter installation, electricity supply and minimum charges. Besides, these private contractors disconnect the connections purely according to their whims. There is complete criminalisation of electricity distribution in these colonies. The consumers are not only paying higher rates; they are also being blackmailed by private contractors who control their power supply.

According to the CPI(M), all these issues fall within the purview of the regulator under the Delhi Electricity Regulatory Act, and the regulator must direct the DVB that it cannot create two classes of consumers and must provide the same facility to every consumer, irrespective of where he or she lives.

Further, the Delhi government’s current power policy has neither been able to address the problem of shortage of supply nor provide power to the people at affordable rates. The last one decade has seen the average rate of power rise from Rs 1.00 to Rs 2.50 per unit, while the high losses and shortages continue. The DVB’s financial crisis has grown rapidly over the past five years. Instead of addressing the real issue of the power sector --- providing adequate power at affordable costs --- the government is talking of unbundling, restructuring, competition and a sharp rise in tariffs. The CPI(M) has warned that, instead of strengthening the basic infrastructure in power sector and focussing on efficient use of existing resources, such measures will only lead to a California type melt-down of the system.

The Delhi government is also trying to induct the IPPs for Delhi. But a stock taking of the IPP route and fast-track projects shows that the experiment has completely failed. The three fast-track projects that have gone online have taken more than seven years to start. As the Enron case shows, such IPP projects bankrupt the state electricity boards (SEBs). The capital costs of these projects were grossly inflated and most of these were met from loans advanced by public financial institutions. The foreign exchange outflows are 30 times the inflows. Thus none of the promises made while promoting the IPP projects, have been fulfilled. Instead, viable boards like the MSEB have been rendered bankrupt by imposing Enron-like projects on them.

In view of the CPI(M), therefore, the DVB and Delhi government must chalk out a crash policy of how to bring down the losses, instead of following the policies whose bankruptcy has already been proved. It must involve the workers and employees in this exercise, rather than try to use them as scapegoats to cover up its own failures. It is well known that the big defaulters and those stealing electricity enjoy political patronage; precisely that is why the thefts have sharply increased. The CPI(M) was categorical that the DVB’s losses can be brought down to the 1992-93 level of 22 per cent, provided the government has the political will to do so.

Secondly, instead of chasing high-cost power, the Delhi government must negotiate with the NTPC for setting up dedicated power stations for Delhi. Any increase in rates, if necessary, must target only the richer sections who consume large amounts of power; at no cost must the tariffs be raised for the lower-end consumers.

The Delhi CPI(M) is also of the view that the Delhi government must share with the people of Delhi the impact which the privatisation of transmission and distribution are having on the current power rates in Delhi. It has asked the Delhi government to take note of the disastrous impact of such restructuring in other states. It is high time the Delhi government must look at power policies from the people’s point of view, instead of going in for privatisation of the power sector irrespective of its cost to the consumers and the public exchequer.

The CPI(M) has demanded that the DVB immediately takes over power distribution in poor colonies and jhuggis, from the contractors who are fleecing the residents of such colonies.

It has also demanded immediate replacement of faulty meters and blacklisting of companies that are supplying such meters. It is now well known that 90 per cent of the meters supplied in the past five years are faulty.