The unbundling of state electricity boards is not mandatory as per Electricity Act 2003, Appellate Tribunal for Electricity has announced in a recent judgment.
The two member appellate tribunal comprising of Justice Manju Goel and Technical Member HL Bajaj has mentioned that unbundling of electricity boards is not the purpose of Electricity Act 2003 but the whole purpose is to replace the inefficient system with an efficient system.
Tribunal was deciding a case between Chhatisgarh State Trading Corporation and Chhatisgarh State Regulatory Commission in appeal number 119 of 2008. The tribunal has dealt Electricity Act 2003 at length in its 32 pages judgment.
Padamjit Singh Chairman All India Power Engineers Federation said that this is what the engineers had been fighting for so long. We had been claiming that it is not necessary to unbundle the board to different companies but steps are required to improve the working of boards.
The judgment says that the main object of the Electricity Act 2003 does not seem to be elimination of state electricity boards of their unbundling in to three separate companies of generation transmission and distribution. Unbundling of state electricity boards is only the enabling provision of act. Thus the State electricity boards may continue but it may not be mandatory for state electricity board to handle the complete business. Since the private companies are allowed in business primacy of state electricity board naturally come to end. However Unbundling of state electricity boards cannot be proposed or objective of the act
The tribunal has given verdict that in fact section 131 of Act we find that state government has not been given mandate for unbundling the state electricity board although steps to be taken if such act is undertaken has been provided. The provisions of section 131, which deals with reorganization of board, come to effect only if state government undertakes a transfer scheme. This provisions does not mandatory brings in transfer scheme.
It is not mandatory for state electricity board to exist or to continue as the state government has option of continuing or unbundling them.
The mischief as we see it may not be existence of state electricity board but the poor performance of board. If a board is competent and efficient it was not required to be unbundled. The sole aim of providing the scheme of unbundling the state electricity board was to replace inefficiency with efficiency.
Further the entry of private capitol in to electricity sector cannot be assumed automatic or natural phenomenon. Unless a state government finds signs of private capitol being attracted towards electricity sector or it is conducive to handover business conducted by the boards in the hands of government companies it would not be wise to unbundled the state electricity board. The sole criterion of providing transfer scheme is to replace inefficiency by efficiency.
Unbundling of state electricity board does not naturally lead to competition. If the state electricity board is unbundled in to three or four companies probably doing different functions without other players in the market the newly formed companies be again a monopoly in their fields. Competition is possible only when there is more than one player in field of distribution.
It cannot be said that the existence of state electricity board was mischief and that if other vertically integrated entities were allowed to come in to existence we would fail the act in achieving the purpose of suppressing the mischief.