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Home KSEB Centre insists on unbundling - State to form a company fully owned by the government

Centre insists on unbundling - State to form a company fully owned by the government

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Kerala will not budge from its political decision to keep the State power utility as a single entity, said Electricity Minister A.K. Balan.

Talking to The News Persons , he said the Chief Secretary and the Power Secretary had gone to New Delhi on 19-09-2008 to explain the State’s stand to the Union government. But the Centre was insistent that the Kerala State Electricity Board (KSEB) should be divided into more than one company.

If the State were to give in to this “dogmatic directive,” it would have probably received more time to complete the procedures required to make its power sector comply with the Electricity Act of 2003, Mr. Balan said.

As of now, the compliance has to be done before September 24 (the final deadline set by the Centre after several extensions).

The State’s plan is to form a company (in place of the KSEB) fully owned by the government.

It is to be formed through an enactment by the State legislature transferring assets and liabilities and prohibiting share transfer. Such a company will enable the government to attend to the social obligations in power distribution and also protect the interests of a large number of KSEB pensioners.

Mr. Balan said the State, thus, had a genuine reason for seeking more time to comply with the provisions of the Electricity Act.

He alleged that the Centre’s tactic was to pressure the State into unbundling the power sector so that “cream functions” could be taken over by the private sector to mint profit.

He said Kerala could not bypass the Central Act. However, within the provisions of the Act, the State had a measure of freedom to decide how to handle its power sector.

The world over, the trend now was for the merger of small companies to form bigger ones for operational efficiency.

There was no logic in asking a small State to break up its power utility.

The State government is consulting legal experts to examine how the crisis created by the September 24 deadline issue could be overcome.

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