AAP and Power Companies

Everything Mr. Ashutosh writes about the AAP perseverance to ensure that the power companies run by Reliance and Tatas were subjected to an audit by the CAG is true. It is absurd for either the Congress or the BJP to now claim that they had the same policy.

According to the first reports of the CAG audit, the culpability of the Sheila Dikshit Government in the (estimated) 8,000 crore fraud seems to be well-established. It cannot be a coincidence that every time important policy decisions were to be taken, the government-nominated Directors on the Board, according to the CAG report, were conveniently absent. Not once but several times. Why should any Government permit such obviously pro-company behavior from its nominees? This is clearly connivance.

Ashutosh is also right in criticizing the BJP and Congress demand for a CBI probe into the CAG findings. When there is prima facie evidence, the companies concerned should be directly charged and prosecuted. There could be an independent inquiry into one aspect of the report, that is, the nexus between the companies, the then ruling party leaders and a section of the bureaucrats, so as to identify and prosecute the individuals involved.

However, two important issues emerge from the AAP position as articulated by Mr. Ashutosh which require reconsideration by the AAP leadership if it is not to be an exercise in self-praise.

The first is a fundamental issue of his party's approach towards the responsibility of the Government in the provisioning of essential services to the people. The AAP position is "it was not against the privatization of electricity, but companies should not be allowed to loot in the name of privatization." Thus there is no difference in the policy approach towards supplying electricity in the Capital between the AAP, the BJP and the Congress. They are all agreed that it should be handed over to private companies, and certainly none of them will say that they are for loot in the name of privatization.

AAP has further articulated its position by asking the Centre to cancel the-long term contracts with the Reliance and Tata Discoms (power distribution companies) and allow the AAP Government to give the contract to other companies, who presumably would not "loot" and agree to terms more reasonable to consumers.

AAP support to Congress and BJP policies of privatization of essential services flies in the face of global experience about privatization in the electricity sector.

There is more than adequate literature available of the experience of the dozens of countries which in the 80s and 90s started the privatization processes of electricity generation and distribution. The general reasoning to push privatization was similar to that used to privatize the Delhi Vidyut Board: to improve "economic efficiency", to "rationalize" (read retrench) the workforce, to improve technology, to check wastage in transmission, to ensure correct meter measurement of use of electricity etc. all in the name of reform.

But as described by analyst Sharon Beder ten years ago "The blackouts from California to Buenos Aires to Auckland, government bailouts to companies in California and Britain, electricity rationing in Brazil, and the fact that it is too expensive for millions of people from India to South Africa" soon showed up the fallacy of the privatization reasoning. In the light of global experience, the very institution which had been pushing for privatization, the World Bank had to admit in its report in 2013 " It is difficult to find consistently beneficial effects of the reforms actually implemented in many countries." (quoted in David Hall, Global Experience with Electricity Liberalisation, Dec. 2009).

In the light of post-privatization realities, many countries which had been at the forefront of handing over publicly-held power utilities to the private sector are reversing the processes of privatization and taking over the companies. These include countries in Latin America like Bolivia, Chile, Argentina, Brazil and also many provinces in the United States and municipalities in Germany.

In India, we have the example of the failure of the privatization of electricity distribution in Odisha, which was the earliest state in India to privatize. Four distribution companies were created and privatized in 1999, with US-based AES Transpower taking over one, while BSES (Now Anil Ambani's Reliance Infra) took over the three other discoms.

AES walked out in 2001, after refusing to restore transmission and distribution lines to rural areas after the Orissa cyclone. Recently, the state power regulator - Orissa Electricity Regulatory Commission - revoked the licenses of Anil Ambani-owned Reliance Infra for gross failure, stating, "Even after 15 years of operation, the licensees have consistently failed to run the enterprise in a commercially sustainable manner." The Odisha government, a strong votary of privatization, had to follow their advice. Remember when Mumbai was flooded in 2005? The areas where private power companies operated remained in darkness for seven days. State-owned utilities provided power within 24 hours.

Why does AAP not pay heed to these experiences? It is a myth being sold by AAP that it is going to find private companies which will act differently.

A differential rate for electricity users with cheaper rates for those below a particular cutoff - in the case of Delhi, 400 units - certainly brings relief to the poorer sections. After Delhi under AAP took this step, it has led to the halving of the bills for such users. But this will not protect such users against the inevitable rise of prices if electricity remains in the hands of private companies.

The second question that arises is has the AAP or the Delhi Government dialogued with Delhi-ites on its support to privatization? It would appear that the democratic exercises that AAP projects as its USP are confined or limited to selective issues that do not require a fundamental change in the policy frameworks of the Congress or the BJP.

It is only when electricity is seen as an essential service and is the responsibility of the Government that the loot of thousands of crores of rupees as exposed by CAG will not be repeated. The AAP and the Delhi Government should take the only logical step, which is to re- takeover the electricity utilities. Essential services for the well-being of the people cannot be held ransom to the profit-hungry private companies.


The above is written by Brinda Karat of CPI(M) more