PUDUCHERRY: Former Lok Sabha MP M Ramadass said that the arguments by the Government of Puducherry (GOP) in an affidavit filed in the Madras High Court last week doesn’t constitute ‘a sound, cogent and convincing case’ for privatisation of the Puducherry Electricity Department(PED) established 112 years ago.
“The figure of cumulative loss of Rs 780 crore conceals many real factors, and portrays an unduly distorted and grave picture of PED before the public justifying its privatisation. Firstly, it is a cumulative loss and not current loss accumulated over decades, which can be tackled by financial restructuring, including privatisation.
Secondly, cumulative loss is the excess of cumulative expenditure over the cumulative revenue, which includes arrears of electricity revenue due to the department from the public over the years. As on March 31, 2022, the outstanding arrears amount to Rs 486.43 crore.
Considering this, the actual cumulative loss should only be Rs 293.57 crore and not the bloated figure of Rs 780 crore. It is a mystery as to why this revenue due of Rs 486.43 crore was not deducted from the cumulative loss,” said Ramadass. He further said that PED is becoming a profit making institution only in recent years through modernisation, which has not been mentioned in the affidavit as the case of privatisation will be weakened.
“During the three year period from 2017 to 2019, it has earned a profit of Rs 49.18 crore. The residual cumulative loss, if any, would automatically be wiped out by the revenue generation activities,” he said, adding that the cumulative loss is partly due to the policies of the government welfare which has used PED as ‘an instrument of achieving public welfare’.
“If the welfare programmes covered under full cost pricing had been reimbursed by GOP, then PED would have earned profit. Also, privatisation is recommended by the Central government in Public Utilities if the Aggregate Technical and Commercial loss (AT&C) exceeds 15%, which is not connected with the cumulative loss presented by GOP.”
Ramadass said, further, the Puducherry government's argument that privatisation will facilitate efficiency and consumer satisfaction was unfounded. "It is widely perceived that the existing system is working efficiently thanks to several recent measures of modernisation and efficiency improvement initiated by the UT government in the context of Electricity Reforms. A private player may have no scope to improve the existing efficiency as the government claims in court," added the former MP.
According to Ramadass, consumer satisfaction is high with the per capita consumption being as high as 2031KWH, one of the highest in India, and the cost per unit is among the lowest in the country. This advantage will vanish once the private player enters the field, and the Central Stations will not provide electricity at a concessional rate to them, he said adding that consequently, the tariff will be hiked. "No Joint Electricity Regulatory Commission or the statutory power of government would force the private company to sell below the cost"
The private player may resort to two-way exploitation -- hiking existing tariff for consumers and cutting wages for employees, and retrenchment policies, he added