Power discoms under public scrutiny

A leading English daily published the findings of the yet-to-be-public CAG report that has audited the three Delhi electricity distribution companies (popularly known as ‘discoms’). Front page headlines across newspapers told us that the three <g data-gr-id="51">discoms</g> (one owned by the Tata group, and two by the Anil Ambani group) inflated their dues by 8000 crores. Very often when mega-scams have hit headlines, citizens have been a bit perplexed about how these seemingly uncountable zeroes affect their lives. But not here! The residents of Delhi are acutely aware of how rising electricity bills have affected their monthly budgets in the past decade. Year on year they have been told by erudite TV panelists and ‘experts’ that ordinary citizens do not understand the complexities and rising costs of power generation and pricing, and how their demands of lower electricity tariffs are unreasonable and populist.

And now the truth is out. The CAG report makes it clear that the rise on power tariffs is not due to the legitimate demands of power generation and distribution, but due to <g data-gr-id="45">discoms</g> buying costly power, gold-plating costs, suppressing revenue, giving contracts to their own sister companies at unreasonably high rates and manipulating consumer figures. The audit also found that consumers have been made to pay for a large number of meters that were not even installed. An instance – bordering on the absurd – is that BRPL (one of the Ambani <g data-gr-id="46">discoms</g>, supplying electricity to south and west Delhi) capitalised the cost of installing 22 lakh meters, whereas their total number of consumers was only 18 lakhs!

These three <g data-gr-id="57">discoms</g> seem to have taken ‘conflict of interest’ to an all new level, conveniently purchasing electricity and equipment at high rates, thereby showing high expenses and adding to cost of electricity to the customer. For example, the Tata Power Delhi Distribution Company paid more than 90 crores to its own power generation plant in Rithala as ‘fixed charges’ without purchasing a single unit of power from them for the past two years. The very auditor who had been working for BSES for a decade was given charge of transfer of assets from the government to the <g data-gr-id="58">discoms</g>. Reliance Energy Limited – who sold more than 1000 crores worth of equipment to the two Ambani <g data-gr-id="59">discoms</g> – engaged in a unique practise of participating as a bidder in a contract, that it was conducting and evaluating itself! No prizes for guessing who eventually got the contract.

The CAG audit is a damning indictment of the reality of electricity privatisation. Yes, privatization of electricity distribution did ensure that a regularised electricity connection reached every home in Delhi. But the creation of a private monopoly effectively ensured that there were no checks on spiraling tariffs.

Inefficiency, license raj, low productivity and stagnancy have been oft-used words and phrases to describe the public sector enterprises that extracted and distributed natural resources and related utilities. And this was the reason that disinvestment was carried out from the early 90s and coal, iron ore, steel, electricity production and distribution sectors were ‘reformed’ and handed over to the private sector. So have these ‘reforms’ curbed losses made these sectors more efficient and brought financial gains to the consumer?

As the case of power distribution in Delhi shows, the answer is a clear no. While there were indisputable problems with the public sector enterprises, and there was a need for reforming the system, the nature of ‘reforms’ introduced seemed designed to loot the natural resources and citizens of the country. Be it the coal block allocation, spectrum sale or electricity distribution, it is large private corporations – with close linkages to the political class – that have made windfall gains. 

‘Reforms’ have become an excuse to hand over natural resources and public sector assets to political cronies. The corruption and inefficiency of the public sector have been replaced by the corruption and loot of crony capitalism.

The close linkages of these large, private corporations – be it those that were allocated coal blocks, spectrum or electricity distribution companies – is there for everyone to see. The fact that the nominees of the Delhi government in the <g data-gr-id="63">discoms</g> and the regulatory authority allowed this blatant theft to happen does make them complicit in this loot of the citizens of Delhi. It is also not insignificant to that all cases of <g data-gr-id="64">discoms</g> in Delhi High Court – whether asking for a stay on the CAG <g data-gr-id="65">audit or</g> asking for further tariff hikes – are being fought by advocates who are senior leaders of the former ruling party. 

Given these facts, citizens would not be out of line if they were to ask what the previous ruling party stood to gain from the loot of the people of Delhi. As 2G and Coalgate scams have shown, the case of Delhi <g data-gr-id="68">discoms</g> is not a unique one. If electricity privatisation were to be investigated in other states, similar skeletons would come stumbling out of their closets. The time has come to rethink ‘reforms’, and bring in structures of accountability and transparency that work in the interests of the common man.