power tariff reduction - the golden egg!
text of letter sent to press:
While the consumer groups would like to believe that they have scored a major victory by getting the KERC to mandate reductions in the power tariffs, all that they may have achieved is the slow death of the proverbial goose that lays the golden egg.
The problem afflicting the Karnataka power sector currently is one resulting from the 'cross-subsidy model' imposed on the ESCOMS by the government, in pursuit of its populistic politics in the garb of Socialism. This provides a convenient, though largely valid, alibi to the ESCOMS for their inability to reduce losses, in turn aggravating their already bankrupt status. In such a scenario, if they are made to shoulder the additional financial burden, there's not far to go for the 'goose'. Load sheddings, etc are going to become the order of the day, with the genset, inverter, converter, battery, UPS, candle industry sector waiting in the wings to take over and make a killing.
The only way out of this vicious cycle is for the distribution in the cities to be privatised, more or less on the New Delhi model, and in the rural areas, on the many successful models existing, including Karnataka's own 'Hukkeri Co-op Society' model. In fact, this was the very objective with which the unbundling of the sector was conceived in the first place, but which has since been side-tracked by various lobbies in pursuit of their narrow vested interests.
The growth prospects in the power sector are just huge (far higher than IT, or several of them put together). And, being an infrastructure sector, its growth can fuel the growth of the rest as well as the economy as a whole. If only the government would get out of the way, and play the roles that is required of it, as the facilitator and the regulator.
While the consumer groups would like to believe that they have scored a major victory by getting the KERC to mandate reductions in the power tariffs, all that they may have achieved is the slow death of the proverbial goose that lays the golden egg.
The problem afflicting the Karnataka power sector currently is one resulting from the 'cross-subsidy model' imposed on the ESCOMS by the government, in pursuit of its populistic politics in the garb of Socialism. This provides a convenient, though largely valid, alibi to the ESCOMS for their inability to reduce losses, in turn aggravating their already bankrupt status. In such a scenario, if they are made to shoulder the additional financial burden, there's not far to go for the 'goose'. Load sheddings, etc are going to become the order of the day, with the genset, inverter, converter, battery, UPS, candle industry sector waiting in the wings to take over and make a killing.
The only way out of this vicious cycle is for the distribution in the cities to be privatised, more or less on the New Delhi model, and in the rural areas, on the many successful models existing, including Karnataka's own 'Hukkeri Co-op Society' model. In fact, this was the very objective with which the unbundling of the sector was conceived in the first place, but which has since been side-tracked by various lobbies in pursuit of their narrow vested interests.
The growth prospects in the power sector are just huge (far higher than IT, or several of them put together). And, being an infrastructure sector, its growth can fuel the growth of the rest as well as the economy as a whole. If only the government would get out of the way, and play the roles that is required of it, as the facilitator and the regulator.
posted by Muralidhar Rao at
1:07 AM
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