The Hindu : Front Page : Unbundling of power sector ruled out

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Thursday, Dec 29, 2005

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Unbundling of power sector ruled out

Special Correspondent

Aryadan says Centre has given special permission to keep KSEB as one entity

THIRUVANANTHAPURAM: Electricity Minister Aryadan Mohammed has categorically ruled out unbundling the Kerala State Electricity Board (KSEB), although the Electricity Act, 2003 mandates the restructuring of power utilities in the country to make the sector competitive and attractive for private investment.

Inaugurating a workshop organised by the KSEB and the Thiruvananthapuram Press Club here on Wednesday, Mr. Mohammed said he had obtained the `special permission' of the Union Government to keep the KSEB as a single entity, against the mandates of the Electricity Act.

He said the performance of the KSEB during the last four years should disprove the basic premise of the Electricity Act that power sector could be made efficient only if various functions of the power utilities (generation, transmission, distribution and trading) were separated from one another.

He said that without restructuring, the KSEB had marched forward from a revenue deficit position of nearly Rs.1,300 crores four years ago to a stage where it could function without cash loss. He said he was confident that the KSEB would start generating profits from next year.

Mr. Mohammed said the experience of States such as Delhi and Orissa, which had gone in for restructuring early, showed that such a reform could even add to the problems of the power sector. "Maybe it is necessary in big States such as Uttar Pradesh. However, Kerala is a small State and we can manage more efficiently without unbundling," he said.

The Minister said it was his considered opinion that privatising transmission and distribution sectors would be `dangerous.' Perhaps it could be allowed in the generation sector, but without strong public sector presence as a counterbalancing force, it could also harm the interests of the consumers, he said.

Mr. Mohammed said the KSEB's turnaround was achieved through systematic efforts to tone up its financial management and bring down transmission and distribution loss.

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