CERS Wants Holding Company For Power Sector Scrapped

Consumer Education and Research Society (CERS), Ahmedabad, has made a representation to the State Energy Minister, Mr. Saurabhbhai Patel, urging him to scrap the Gujarat Urja Vikas Nigam Ltd. (GUVNL), a holding company for the State-owned six other entities in the power sector, which includes one generation, one transmission and four distribution companies.

"Let the six entities, which have been working under the regulated framework of the Gujarat Electricity Regulatory Commission (GERC), work independently and be made accountable to the Commission. Therefore, a holding company like the GUVNL has no role to play in monitoring the affairs or performance of these entities," CERS added.

Besides, during a recent correspondence with the GUVNL, the latter has stated repeatedly that it is not involved directly or indirectly with these entities.

CERS pointed out in the representation that, while unbundling the Gujarat Electricity Board (GEB) as per the Electricity Act, 2003, the Government of Gujarat had assigned the following functions to the GUVNL by its Notification dated 24 October 2003, namely, to

• -carry out the residual functions of the erstwhile GEB
• - co-ordinate activities of its six entities
• -determine their economic and financial objectives and targets
• - review, control and guide their performance
• -carry out business of purchase, procurement, sale, supply and trade electricity
• -plan, promote and develop efficient and reliable power trading system.

From the above it is evident that the generation, transmission and distribution companies are incapable of carrying out their business independently though headed by Managing Directors of the IAS cadre. There are very few States, e.g. Maharashtra, Madhya Pradesh and Uttar Pradesh which have holding companies. It is interesting to know that States like Andhra Pradesh, Delhi and Karnataka are managing their affairs and are rated among the top five companies by the Ministry of Power but they function without holding companies to manage their affairs.

Distribution companies sign power purchase agreements (PPAs) directly with State-owned or private generating companies and suppliers and, therefore, one fails to understand the role of the GUVNL in the power sector of Gujarat. The "GUVNL is not ready to take the responsibility of a single paisa and works as postman by transferring letters to respective entities. The expenditure of the GUVNL, which includes infrastructure, salaries and perks of officers and staff amounting to crores of rupees, is imposed on the electricity consumers of Gujarat.

Date : 30/07/2007

Place : Ahmedabad