State says power is part of Concurrent list and it has no intentions of privatising sector

The Kerala State Electricity Board (KSEB) has raised strong objections to the draft standard bidding documents (SBD) for the privatisation of State-owned power distribution companies published by the Union Power Ministry.

The State government-run power utility has informed the Ministry that Kerala has no intention, whatsoever, of privatising its power sector.

In an October 8 letter to the Secretary, Power Ministry, the KSEB has drawn attention to the Ministry’s own observation that “Under the Indian Constitution, power is a Concurrent subject and the responsibility for distribution and supply of power to rural and urban consumers rests with the States.”

The draft SBD encroached upon the domain of the States and attempts to dictate the ways and means for privatisation of the utilities owned by them, KSEB chairman and managing director N.S. Pillai said in the letter.

The Union Ministry had released the draft in September to guide the States in the privatisation of state-owned distribution companies (discoms). The Centre is already going ahead with plans to privatise discoms in the Union Territories by January 2021.

It was for long been the declared stand of Kerala that its power sector would be retained in the public sector. Several of the draft proposals are unfair, and, if implemented, would entail additional burden on the state and the public, the KSEB noted.

The KSEB objected to such draft proposals which would require transfer of assets and employees to the “successor entity”, the share-holding pattern, and the transfer of only profitable power purchase agreements (PPA) of existing discoms to the successor entities. The draft SBD went on to suggest that the “successor entity will be provided with a clean balance sheet free of accumulated losses/ unserviceable liabilities. Further, wherever required, the concerned State/UT government may provide suitable transition support to the successor entity for a specified period of say 5 or 7 years.”

Further, the KSEB pointed out that it was doing well on all fronts including customer service, affordable tariff, and loss reduction. But for the 2018 and 2019 floods and the COVID-19 pandemic, the utility would have recorded a profit. It also claimed to have avoided load restrictions since 2015. “During 2017 itself, at a stage when the rest of the nation was struggling to electrify most of its villages, Kerala achieved 100% household electrification. Today, there are no hamlets in the State where electricity has not reached,” it noted.

The KSEB suggested to the Ministry that the draft be revised limiting the applicability of the SBD to discoms in the Union Territories.

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