Uttar Pradesh Chief Minister Rajnath Singh met Prime Minister Atal Bihari Vajpayee last month with a wish list: could he have more money for a programme for the electrification of UP which will lead to full electrification by 2007?

The Prime Minister had finance minister Yashwant Sinha come to the meeting. All the indications are that Rajnath Singh’s demand for central assistance to the tune of Rs 615 crore, will be granted despite a huge central fiscal deficit and transmission and distribution losses of more than 40 per cent in UP.

Want to hear stories of trembling political will? Read the history of power sector reform in the states.

It isn’t that state governments don’t want to rationalise power tariffs and streamline distribution. Regardless of which party has been in power, the governments of Gujarat, Andhra Pradesh, West Bengal and Orissa—to name a few—have unbundled electricity boards into separate entities for generation, transmission and distribution.

In each state, distribution is the tricky issue. Metering is the next step. How many states have shown the political courage to take this step?

According to Nayan Parikh, infrastructure consultant and advisor to the Chattisgarh and Madhya Pradesh governments, most states don’t want to meter energy supplied to agriculture sector.

Gujarat is one. In Rajasthan, although the state government has installed meters it has been unable to operationalise them.

It seems to be a chicken and egg problem. Farmers say they will not pay more for power unless the quality improves. The state governments say until they are paid for electricity consumed, they can’t improve the quality of supply. The result is retreat by government. In Gujarat for instance, the government has temporarily shelved the proposal to meter power consumption in the agriculture sector.

In a bid to follow the textbook prescription of power sector reforms, every state also designated a regulator to decide tariffs. However, governments have been retreating when faced with the implementation of the regulator’s prescriptions. The Orissa Electricity Regulatory Commission announced an overall tariff increase of 10.23 per cent for all categories of consumer earlier this year. Though overall percentage hike in each of the last four years was less than the pre-reforms era, there were strong protests from different political outfits and consumer groups who say the tariff structure needs to be rationalised rather than tariffs raised.

The story is the same in Andhra Pradesh, a pioneer in power sector reform. From April 1, 2000, distribution was segregated from transmission. An independent statutory Regulatory Commission to balance the interests of the various stakeholders and utility was set up on March 31, 1999. The Regulatory Commission has revised the tariff twice, directing the government to subsidise the losses incurred by the power utility towards supply of power to the farm sector at near-free tariffs.

The one success story in power sector reforms, is ironically, West Bengal, ruled by the Left Front. West Bengal is now surplus in power after the commissioning of the Bakreswar thermal power plant III. This is partly because 83 per cent electrification of the rural ‘mouzas’ has been completed, to reach 85 per cent in two years. Much of the supply is metered and WBSEB’s transmission and distribution loss is 39 per cent, one of the lowest in the country. This figure includes a lumpsum monthly payment by the agriculture department for power supply to farmers. Although WBSEB sources admit full metering is yet to be done, panchayats have been made responsible for installation and protection of meters and prevention of theft, according to state power minister Mrinal Banerjee.

If West Bengal’s power sector reforms are a success, why has the same Left Front, till recently in power in Kerala, failed to make headway ?

Because of the abundance of hydel projects in Kerala, the state can meet upto 85 per cent of its power needs from its own resources. But there is no denying that Kerela has arguably the most inefficient power distribution and supply system in India. The management of Kerala State Electricity Board is a disaster. According to a white paper released by the government on its finances, the state’s accumulated losses in the power sector add up to Rs 4000 crore. A 25 per cent hike in tariff was imposed recently. Alarmed at political reactions, the ruling UDF government set up a tariff regulatory committee to re-structure the tariff. But it is industries that are largest consumers of electricity. FACT, Carborandum Universal, Indal, TCC etc are facing a crisis because of the hike and the industrial recession in Kerala is only expected to deepen after this move.

The story of success is only as good as the last success. Orissa was the first state to undertake privatisation of power (1995). The multinational power major, AES came to Orissa to teach it to discipline power transmission and distribution.

The story has a sad ending. After buying up 51 per cent of Cesco (Central Electricity Supply Company), AES found that other distributors were simply not paying the bulk supplier, and finally the generator. The government had stakes in most of the distribution entities. Tension between AES and the distributors led AES to pull out of CESCO and led to AES pulling out of the Indian power sector altogether, amid a great deal of bitterness on both sides.

The lesson? Governments must when need drives. Otherwise, power sector reforms might as well be dead.