5/02/2000

In the reforms process, why do we need to unbundle and privatize electricity boards? Can we not reform the Boards in their present form?

There are many issues. How do we insulate the working of  the  electricity boards from interference by the politicians? How do we make the boards and the employees working in them accountable? Today one gets away with losses, inefficiency and corrupt practices. Vested interests have crept into the system. Privatization and restructuring of the State Electricity Boards addresses these issues to a large extent.

There is a social aspect in dealing with huge numbers of employees? Do you think there are private companies in India with adequate skills and experience in these areas of operation?

This is my apprehension. There are not many companies, which have the experience in India. There are very few companies having some experience in India and there are some foreign companies with experience in other parts of the world. Perhaps companies that do not necessarily have experience in private distribution but have good managerial resources can be involved in tie-up with some of the foreign companies. 

In the reforms process in power sector, do you think the utilities in  the states other than Uttar Pradesh will also face a major road block with employees and trade unions?

There is a natural apprehension in the minds of the trade unions (TUs) that the reforms are not in their favor. There is a concern with regard to security of job, once the corporations get privatized. The current crisis was the initial reaction due to these concerns. 

When we were involved in the restructuring of the Orissa State Electricity Board, a series of workshops and seminars were held in Orissa on the reforms process with the employees and attempt was made to satisfy them on the questions they posed. 

A lot of resistance to the reforms process is due to the lack of knowledge amongst people. Wherever reforms were attempted, no large scale redundancy of employees took place. There is a need for dissemination of information. More facts have to be placed before enlarged forum of employees. We need to present before them cases where similar situations were tackled earlier. I have been personally involved in some of the acquisitions by NTPC where similar situations existed. 

When I was involved in the takeover of the Talcher project by NTPC, all the employees were assured that they would be absorbed and in fact they were absorbed in the nearby power plant of Kanhiya, Talcher. The Talcher power plant, which was very old and running at 30 per cent plant load factor (PLF) is now running at 56 per cent PLF due to redeployment of workforce and by bringing about a change in the working environment. Similarly when NTPC took charge of the Rs. 9.2 billion, 420 MW Uchahaar power project from UPRVN to set off the dues of the Uttar Pradesh State Electricity Board (UPSEB), we took on board all the employees except the very senior employees of UPSEB. Though initially there were doubts in the minds of the employees, there lot is much better now and the performance of the project has improved immensely. Recently NTPC has added two more units of 210 MW and it is one of the very good operating stations in the country. The Badarpur power plant on the outskirts of Delhi, prior its take over by NTPC was being managed by Central Electricity Authority (CEA) with a work force of 2700 employees. After the takeover, over a period of time the work culture in the plant changed. We added another 210 MW and the performance and productivity improved significantly. One can see that in these cases, staff was not retrenched and at the same time higher efficiency levels were achieved. 

How can we convince the employees that they will not loose jobs?

In the reforms process, it is not necessary that employees will be retrenched. In fact by improving the efficiency, same workforce can be deployed in expansion of projects or activities.  We need to show them by demonstration in certain places and projects that the interest of the employees will be protected. This is part of the mandate, whereever disinvestment is taking place. However, it is a process which should be handled carefully using the best in industrial relations and HRD. In case of distribution privatization, the employees should be presented with the scenario that improvement in services will lead to more connections, more consumers, additional power that has to be consumed. This will lead to more jobs rather than retrenchment. We need to assure and bring to the notice of employees that if the prospects of the utility improve, their growth prospects also increase. On the other hand, if the utilities or the boards are financially sick, they will  stagnate and there will be no growth prospects for any one. The employees should be able to appreciate that no organization can stay in a state of sickness.

What kind of means should be adopted for this kind of educational process?

There should be more communication. This could be achieved by holding workshops and seminars with the employees. Actually what we need is frequent open house sessions with the employees, where the questions raised by them can be answered by the management. We need to address their concerns in a convincing manner. These workshops could be addressed by people who have credibility. It is not a process between trade union leaders and the management. We should reach out to the employees themselves. And then as I said, we need to present case studies to the employees and also demonstrate through some projects that the interests of the employees are safeguarded.

What is the time scale over which the process is expected to yield results? Three years have already gone by in the case of Orissa, perhaps with very little to show in terms of results?

In the case of Orissa, it is not really so. The process first involved unbundling,  then disinvestment of government holdings and finally privatization. Orissa reform is now in third mode. The privatization of the distribution companies took place over the last one year. Already losses have reduced. With some investments, substantial improvements in quality of supply and total availability will take place. This process may take 2-3 more years. In the reforms process, no dramatic results can be expected. There will be constant and steady improvement. Managements and the political class have to be told that it is a long drawn out process. So long as the direction is right, results will show.

What are your views on disinvestment of NTPC 

I don't see any sense in disinvestment of NTPC. There are very strong reasons:
1) NTPC is one of the best managed companies.
2) The stations are operating very well
3) The Company is generating substantial profits

The only major problem they have is in realization of dues from the SEBs. There is no advantage in privatizing NTPC as far as management and working of NTPC is concerned. Secondly, the problem of dues is not going to go away with privatization. It will become more difficult for privatized NTPC to get its dues. And if the idea of privatizing NTPC is due to fiscal or budgetary issues - that should be the last reason. If at all, the power sector needs incremental investments from the government and not otherwise. I feel disinvestment of NTPC will be a purposeless exercise. In my opinion, if NTPC's commercial activity is taken care of and its dues are recovered, then this organization can add 15,000 MW in five years without any government support and through its own internal resources and potential to raise money in capital market.