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The Rediff Interview/P R Kumaramangalam

'So why should the common man pay for someone else's theft?'

The strike by the Uttar Pradesh State Electricity Board has gone past the six-day mark, but it is finally showing signs of waning. The UPSEB's 80,000- strong workforce had gone on an indefinite strike from January 15 to protest against the state government's decision to restructure and divide UPSEB into three separate companies to specifically look after generation, transmission, and distribution.

Union Power Minister P R Kumaramangalam, well known for his pro-reforms image and who declared that privatisation of the power sector is an option, has refused to budge. He has ensured that the Uttar Pradesh government stands firm in its face-off against the striking workers, and his uncompromising stand seems to be paying off. Striking workers have begun trickling back to work while the government has extended its deadline to sack striking workers in the hope that more will return to work.

Onkar Singh and Amberish K Diwanji met the minister in his office where he spoke his mind on the current strike and the roots of the electricity problem that so plague India. Excerpts from the exclusive interview:

What is the current situation in meeting Uttar Pradesh's power requirements?

The situation is that about 4200 megawatts is the peaking power demand. Initially, when the strike first began on the midnight of 14-15, on 15 and 16, the generating plants in the state were generating around 3000 mw, which meant that they were running at slightly over 60 per cent of the installed capacities. But by January 18, the situation changed and we were drawing about 3900 mw to 4000 mw and by today, we are drawing 4200, which is back to normal.

Again, some bit of suppressed demand is being realised. The northern grid works at 48 cycles, but since yesterday it has been 50.3, which is fantastic. Thus we are generating at almost 101 per cent PLF (plant load factor) at thermal plants and we have been overgenerating by almost 12 to now 18 per cent in hydel, thanks to the fact that some snow has been melting.

So without cutting off anybody, Uttar Pradesh has been getting more power than it usually drew.

Meanwhile UP has picked up generation. The National Thermal Power Corporation has been generating power at 1800 mw, which is what the situation was before the strike began, but they are achieving the same by using only three to four plants. Hence, generation and supply is okay.

The real problem is maintenance of the distribution. Who is going to look after the distribution? NTPC and NHPC (National Hydro Power Corporation) can maintain the generating plants, but not the distribution networks, that is not their job.

But here again things are looking up. Yesterday, about 7,000 to 10,000 workers returned to work, and today, another 7,000 to 10,000 workers have broken away from the strike. Hence tomorrow morning (January 21) they should start the day with 20,000 employees besides others who may join back out of the 80,000 total employees. This is not too many, but it is a beginning and provides a skeletal staff.

The striking employees have many fears?

There has been a lot of misinformation such as once the UPSEB is restructured, the employees were told that their jobs would be lost, that their provident funds, their pensions and gratuity payments would be taken away by the government. We have clarified on all these counts.

And as more and more messages have been going out that the real problem is not these fears but the matter of siddhant (principle), as the strike leaders call it, that the UPSEB should not be broken up. We are saying that we are breaking up UPSEB to make smaller, more clear, transparent and accountable units because we find that the reported losses suffered by UPSEB in T&D (transmission and distribution) is 43 per cent. Beyond that, 30 per cent of the power generated is provided free to the farmers. Thus, actual revenue recovery is less than 20 per cent!

Thus, it seems that there is no money coming in. Someone jokingly said that UPSEB should provide power free because the money spent in recovering that 20 per cent is more than is actually earned!

The employees had been indicating that they would go on strike. So why was the UP government not prepared to handle the strike? Do you think the UP government mishandled the situation?

No. There is a certain way that has to be followed. We can't start by carrying out preventive arrests, we can't lock up people on mere suspicion that he may do something once the strike begins. We can only lock them up once the man commits the crime, not the other way round. What we did do was to place security personnel outside the key installations, who moved in the moment the strike began to prevent sabotage. I guess once the strike is over we will look into why some such installations such as Anpara and Okra were not secured early enough.

The key problem in the high losses suffered by the UPSEB is efficiency. Could not efficiency have been ensured without breaking up UPSEB?

Ultimately, what happens when you are a monolith is that the accounting systems are also monolithic. You can't really track to the extent that you need to do to ensure accountability, specially when there are three different kinds of jobs being done - generation, transmission, and distribution. And being such different activities, when you mix them up for accounting, you end up messing up things.

The striking workers claim that the splitting of the UPSEB is a prelude to privatisation. Is that a possibility?

Yes, there is certainly a possibility. Why not? If after the division of the UPSEB, the divisions do not perform and allow the mafia to rule the roost and seek power, then we have no options (but to privatise).

The game is very big. For instance, it is Rs 15 billion in Uttar Pradesh every year, in Delhi it is 8 billion very year just in transmission and distribution losses. The strike is being financed by the mafia.

So is this division a sort of signal to others?

The signal is very clear. Anyone who is under any illusion should be very clear from our side. If working of the SEB (state electricity boards) don't improve, then.... Till now, no SEB has been declared a case similar for the BIFR (Board for Industrial and Financial Reconstruction; a board that takes up the cases of bankrupt companies) but they will soon become fit for it.

There was a move in recent times for NTPC to take over NHPC. What happened?

Nothing, just some egos were bruised. Obviously the NHPC engineers were unhappy at their turf being poached upon and objected to it. Quite understandable, each one thinks he is better than the other, and each one should be allowed to think so. What is being done is that this is one of the many options being looked at. ICICI and SBI Caps (both merchant bankers) are reviewing the matter and have promised to submit a report of their recommendations by February 10. Only then will the government start applying its mind.

Were the workers not aware of the impending move to split UPSEB?

The workers were very well aware. This move has been under consideration for the past 10 years. Restructuring and privatisation have been on the cards.

Let me also add that at this stage, privatisation is not really the issue. I have made it clear that privatisation will happen only if the various SEBs continue to run in losses and if the working does not improve. The workers are really worried about the fact that responsibility will now be fixed, that we will know where the power theft is taking place and hold someone accountable.

Is there no other way of restructuring?

Some SEBs are looking at it differently. They are splitting their SEBs into companies for generation, transmission, sub-transmission and power trader (laughs)! So there are various ideas floating around. It is not for me to decide the final method but for the SEB concerned to do so.

This restructuring report came out of two reports. One was the 1996 Chief Ministers' Action Plan for Power meeting report, and the other report was from the NPC (National Power Council) subcommittee that was chaired by Sharad Pawar and included Jyoti Basu. Thus this did not come from the BJP.

Are others also planning to restructure?

Of course. Karnataka, Maharashtra and other states are looking at it, while Andhra Pradesh, Orissa, Haryana have already restructured. Every state will have to look into the finances of its electricity board and make the necessary decision. If the SEB cannot improve its financial position, either by management or by other methods, slowly there will be no investment available for further expansion and the present system will just not be able to cope. Such states will have darkness!

Delhi suffers from very low supply of power. What is being done about it?

We have told Delhi that if they are willing to reform in such a manner so as to reduce their T&D losses, then we are willing to help them out by giving them soft loans to improve their T&D situation. The Delhi government seems to be inclined for it, but when I can't say.

So what next?

I would like to state that I do not believe in any 'ism'. The bottom line is pragmatism. Today, in Delhi, the common man pays a tariff that varies from Rs 1.60 to Rs 3.80. But if the Delhi electricity board can cut its T&D losses from the extreme high of 45 per cent to even 25 per cent (which is also very high but just a bit more than the national average of 23 per cent), then the tariff for the common man will come down to Rs 2.50. So why should the common man pay for someone else's theft?

Today, there is no accountability and once the restructuring is in place, everyone who works in the SEB will be accountable. The bills will be transparent unlike today where you just get a total that explains nothing, there will no longer occur the cases of overbilling, and things will be better.

The Rediff Interviews

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