STATE GOVERNMENT KILLS THE SPIRIT OF ELECTRICITY ACT, 2003

Subhas Chandra Pattanayak

Government of Orissa has almost killed the spirit of Electricity Act 2003 and, that too, willfully. This is notwithstanding giving retrospective effect to the ‘Orissa Electricity Reforms (Transfer of Transmission and Related activities) Scheme, 2005, shown to have been formulated for implementation of the Act.

Under the Scheme, the Grid Corporation of Orissa (GRIDCO) is to transact the lone task of trading of electricity whereas its original responsibility of transmission has been transferred to a new public enterprise styled as Orissa Power Transmission Corporation Ltd. (OPTCL) with effect from 1st April 2005. The State Government had to do this under compulsion of Law but in execution it has played the trick that strangles the Scheme. To spot the trick we shall have to trade into its background.

The Electricity Act, 2003 was enacted and enforced with effect from 10th July 2003 in supersession of two archaic Laws namely Electricity Act 1910 and Electricity (Supply) Act 1948, after a lot of debates across the country. It diagnosed the chaos in electricity sector as an outcome of continuous negligence to marketing of power like any other commodity produced through any means of production. It also recognized the difference between all other productions and electricity. When other productions can be stored, electricity can’t. It doesn’t even wait to perish like other consumer commodities. It is lost if not consumed immediately. Hence prompt, immediate, planned and orchestrated marketing of power was essential to make power sector healthy and earning, the new Law underlined. Hence it stipulated that trading must be separated from all other activities in power sector and run by answerable organizations. In effect, separation of trading from all other activities became the core spirit of Electricity Act, 2003. To give this Law the required national teeth, the Electricity Regulatory Commission Act, 1998 and the Reform Acts that were in force in as many as eight States were also superseded.

Orissa was the first State to have promulgated Electricity Reforms Act in 1995. But, for reasons best known to IAS officers who manned the Energy Department and the Minister-in-charge, it adopted tactics that render the spirit of the new Act inconsequential.

It may be recalled that Government of India had opened up power sector for private participation in generation as well as in distribution in accordance with the recommendations of ECC group in 1991 following which Orissa had formulated its Reforms Act.

After adopting the Reforms Act in 1995, Orissa had bulldozed her State Electricity Board and created in its place two separate Companies under State ownership with effect from 1st April 1996. GRIDCO was created to undertake transmission and distribution activities and OHPC was created to generate Hydel power respectively.

The mismanagement that followed and the utter humiliation the power engineers of the State had to undergo as lobby pass outs were put in to rule over them still live in memory of many. Orissa’s climate suddenly suited predators who were eager to prey upon the power consumers and the politico-executive nexus anxious to oblige the lobby mechanism went on contriving set-ups that should commensurate with their hidden agenda.

At this stage, the State government, by an Ordinance on 26th Dec.1998, created four distribution companies namely CESCO, WESCO, NESCO AND SOUTHCO as subsidiary companies of GRIDCO to undertake distribution activities in different regions of Orissa. The later three subsidiary companies, as per the hidden agenda, were privatized on 1st April 1999 and handed over to BSES. Now they are controlled by Reliance Energy Ltd. The other one, i.e. CESCO was privatized five months later, on 1st Sept.1999 to facilitate AES India- a subsidiary of AES Inc., USA taking it over on the same day. But the follow up scenario was so chaotic that AES has fled and since 2001, CESCO is running under direct control of OERC through one CEO and Administrator appointed for the purpose. This data gives glimpses of unplanned, unsettled, uncertain, and unspecific management (deliberately done so to serve hidden masters) that has engulfed the electricity sphere in the State. As a result, the consumers are suffering, all their hope generated under the slogans of ‘reforms’ having shattered.

Therefore, in the Electricity Act, 2003, in search of a remedy, in supersession of all earlier Acts, serious attention was given to proper marketability of electricity with answerable responsibility. Therefore trading of power was recognized, for the first time, as the core of activity in the electricity sector.

Trading having thus been given a distinctly independent entity, the new Electricity Act emphasized on its separation from all other activities like transmission and distribution. Hence transmission and distribution organizations were banned from trading in electricity. A grace period for separation of trading from transmission etc. was however granted till 10th June 2004.

GRIDCO, which was functioning as State Transmission Utility in Orissa, was also engaged in power trading.

The State Government did not take diligent steps to end this jumbling. It wanted and obtained an extension till 10th June 2005. But instead of bringing out the required separation, it wanted the status quo to continue for another year. The Union Government turned down the request on 20th April 2005 as the Act of 2003 did not permit this design. Under such a circumstance, the State government had to formulate the Scheme mentioned supra with retrospective effect. But that was just to hoodwink the Central Government. In reality it wanted to block its implementation as long as possible.

Notification No.6892 dated 9th June 2005, whereby the Scheme became operative, is a pointer to this. GRIDCO had no Technical Director on its Board for around four years even though its subject rests on technology. No electrical engineer, after retirement of Bijoy Kumar Mohanty, was inducted as a Director. Without rectifying this colossal wrong, by this Notification, all the personnel on role of GRIDCO as on 31st March 2005 were transferred to OPTCL with effect from 1st April 2005. There was no posting of any power engineer to direct this new set-up also. This Notification rendered both the organizations bereft of necessary human resources. GRIDCO retained a Board of Directors without any Technical Director and any staff down below to work whereas OPTCL got the staff without any Director to guide. This lacunae laughing at the Scheme, a new idea was cooked up to parade a remedy. On the next day, i.e. the 10th June 2005, another Notification was issued vide No.10086. This Notification assigned the responsibilities of Managing Director (MD) and Director (Finance) (DF) of OPTCL respectively to the Chairman-cum-MD (CMD) and DF of GRIDCO. What more jumbling could have been possible?

It is impossible to accept that the IAS officer who tops the Energy Department in the Government and the Chief secretary who enjoys paramount power over this officer and the Minister who holds the portfolio and the Chief Minister behind whose back wind does not pass in the government, could not visualize that posting of CMD and DF of GRIDCO as MD and DF of OPTCL to work simultaneously in both the organizations would create utter confusion in execution of the Scheme as both the categories of assignments represent conflicting interests.

It seems, this arrangement has been deliberately made to hit at the head of the Scheme and thereby to frustrate the Electricity Act in its execution.

No Technical Director available on the scene in both the organizations, power trading necessitating real time response, the jack of all trades bureaucrats have made a mess of management of both GRIDCO and OPTCL under the nose of a minister, who, were not a minister, would have been doing his old trade of newspaper hawking, and a chief minister, who is known more for dependency on bureaucracy than understanding the hunting problems of Orissa.

Incompetent or innovative hoodwinkers they be, it is clear that the people in power in Orissa have succeeded in rendering so far the Electricity Act of 2003 inconsequential.

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  1. Yes
    It is completely right. After privatisation of Electricity distribution sector , the consumers found themselves in a unexpected black hole.The rules and regulations of Electricity Act,2003 are in the drain.Employee working standards are also diminished . Reliance Energy is targeting only revenue collection from the people and have no interest on technical improvement standards ,quality of supply and safety of consumers .Theft of electricity has also been increased due non cooperation of police department in govt sector with the distribution companies which are completely private.
    Ultimately people of Orissa are suffering the worst.
    More than the over, the company is showing its monopoly in absence of other competitive companies.

    Clearly The IAS have lost their practicability.

    J.Keshari Gajanan
    Marathali,Bangalore

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