The Hindu Business Line : `Electricity Act review unwarranted'

THE grounds for review of the Electricity Act, 2003 as sought by the United Progressive Alliance (UPA) appear to be unwarranted, according to Government officials.

The UPA, in its Common Minimum Programme (CMP) has sought review of the Act on the grounds that several States have sought extension of the June 10, 2004, deadline for unbundling and replacement of the State Electricity Board with separate entities to undertake transmission and distribution of power in the States.

They point out that the Act provides for extension of the deadline. Section 172 (a) of the Electricity Act 2003 states that "... for such further period beyond the said period of one year as may be mutually decided by the Central Government and the state Government;" The `one year' expires on June 10, 2004 since the electricity legislation was enacted in June 2003.

The States that have sought extension of the June 10 deadline include West Bengal, Kerala, Assam, Chhattisgarh, Punjab and Himachal Pradesh.

On the power generation front, the CMP has pitched for an actively private sector role in the power generation as well as the distribution business. Interestingly, while there are several bids in the market seeking private participation in the distribution business, in States such as Gujarat and Karnataka there is a veiled opposition to privatisation of distribution. The State Governments are attempting to overcome this problem by proposing to hand over the power distribution business to Central sector companies such as National Thermal Power Corporation (NTPC).

On the power generation front, private participation in the generation business is not forthcoming owing to the fragile financial state of the power purchasers, the State Electricity Boards or their successors.

In the absence of a mature and secure consumer base, generation capacity addition in the private sector will require state assistances such as guarantees. Interestingly, the previous BJP-led government, in its last days had opposed the grant for guarantees to promote around 10,000 MW of private power. The proposal was mooted by the Power Ministry but shot down by the Finance Ministry.