Seb Corporatisation Clause Dropped

In a complete U-turn, the fourth draft of the Electricity Bill 2000 says corporatisation of the loss-making state electricity boards is not mandatory. The states can now allow them to function in their present form, according to power industry sources.

The first three drafts, however, clearly stated that it was mandatory to corporatise the SEBs.

Experts in the power sector said dropping the corporatisation clause defeated the very objective of the Bill. "The idea behind corporatisation was that there would be greater autonomy. It would have resulted in greater accountability and a profit-oriented structure for the SEBs. And corporatisation would have paved the way for privatisation," a power industry source said.

The official explanation being given for this move is that once the states realise that the Bill ultimately aims at SEB unbundling, privatisation and accountability, they will automatically follow suit.

The fourth draft has also introduced a provision which allows the reform Acts introduced in various states, like Orissa, Haryana, Uttar Pradesh, Rajasthan, Karnataka and Andhra Pradesh, to be left untouched.

These states are in various stages of unbundling SEBs into separate companies for generation, transmission and distribution.

The SEBs owe their poor financial health mainly to two reasons. First, SEBs, under political pressure, sell power at subsidised rates to farmers. Then, there are huge transmission and distribution losses. In fact, power minister P R Kumaramangalam had once referred to T&D losses as "theft and dacoity" losses.