Kerala State Electricity Board becomes an illegal entity on September 24 for not complying with the Central Electricity Act.
Agreements signed between the Board and supplies and consumers may not be valid before the law, unless the Centre extends time to the Board for its restructuring as per the provisions of the Act.
There is little doubt that the Act is meant to facilitate privatization of the utility. The Left Democratic Front ruled government is unwilling to privatize the Board. Hence, its refusal to obey the law.
However, the prime concern should be whether privatization would benefit the public at large. Several countries keep their electric utilities in the public sector. This facilitates control over generation and pricing of electricity, which can be considered a primary commodity. The stakes are high in generation that it may be justified to keep generation in the public sector. However, the same cannot be said about distribution.
The Board has for long failed to provide the consumers quality power and satisfactory service. Disruption of supply and low voltages are common, especially in the rural areas. The Board has hardly ever provided supply as per quality norms stipulated by the law. Though storage in its reservoirs have improved, it unable to relax the power cut and load shedding as several of its generators are in disrepair. Many sectors in the State are suffering huge losses because of increased expenditure on power. The marine export sector alone is said to have suffered a loss of around Rs. 200 crores.
Corruption is rampant that consumers have to pay bribes to get connections, urgent repairs and even to get disrupted power supply restored.
So, with privatization and strict regulation, it would be possible to ensure accountability in the distribution sector. We have the example of the Telecommunications Department, which was converted into a public sector company and made to compete with the private sector. The efficiencies improved though may not be to the satisfaction of all. (But they have a choice.) The linemen no more ask for a bribe to service a telephone connection.
So, things could improve if private players are allowed into the distribution sector. In the generation sector, private players already operate small hydel projects and wind power stations. The generation sector could be opened up further, though not entirely. Transmission could remain with a public sector entity.
However, it is to be remembered that restructuring is not a big success in States such as Orissa. So, restructuring of Kerala Electricity Board would have to be undertaken under strict regulations and governmental supervision.
Update: The Government has taken over the assets and liabilities of the Board with effect from Sept. 25 as a prelude to its restructuring.