The cost of a free lunch

In purely commercial terms, the announcement actually costs a lot more. About 750 million units of electricity are consumed by the farm sector every year. At an average rate of Rs 2 per unit, the actual loss is around Rs 1,500 crore.

But the government sees it differently. "Nowhere in the country is power supplied to the agriculture sector at more than 50 paise per unit," says PSEB Chairman S.K. Tuteja. Punjab was also charging half a rupee per unit prior to thefree power announcement. By this logic, the loss would be around Rs 375 crore. But the government is getting an estimate from the actual revenue recovered and expenditure prior to the announcement. By that reckoning, the cost of power for agriculture adds up to 33 paise per unit, and the cost of the dole to Rs 226 crore.

But this logic obviously does not satisfy the employees, particularly the PSEB engineers’ association who have time and again been very critical of the move. "If PSEB has survived till date despite such adverse measures like free power, it is only due to the availability of cheap hydro power and a favourable hydro-thermal energy mix," says V.K. Gupta, a spokesman of the PSEB engineers’ association.

The Board is in dire financial straits thanks to the dole. Last year, commercial losses amounted to Rs 730 crore and the budget estimate for this year puts it over Rs 930 crore. The expenditure on establishment and administration is nearly Rs 1,000 crore. The number of employees per millionunits sold is 5.18 against an all India average of 3.5. The number of employees per 1,000 consumers is 18.33 as against an all-India average of 12.31, a fact which is conceded by the Board.

Free power brings on other problems too. Farmers continue using superannuated and inefficient pumpsets. There is no incentive to save electricity or to replace old transformers.

The free power slogan provides a cover for another fraud. The PSEB engineers’ association is of the opinion that about 16 per cent of commercial losses, which includes theft and wrong metering, is covered by booking it to the agriculture sector. About four years ago, the PSEB had initiated an exercise to separate agricultural, commercial and technical losses, which are clubbed together. The focus on commercial losses led to a scheme for compulsory installation of electronic meters for all industries with a load of 1 MW or more. All substations were also equipped with electronic meters.

Tuteja states that the exercise is in full swing. Allindustries which consume more than 1 MW have had to install electronic meters, and this segment accounts for 70 per cent of revenue from industry. The next target is the medium-size sector with a load of 500 KW and above.

But real reform is far away, says Padait Singh, president of the PSEB engineers’ association. "This balloon of bankruptcy is near bursting-point and the announcements by the government have been suicidal." He suggests that immediate corrective measures can restore the financial health of the Board. "All-out war on power thefts, revision of tariffs and reversal of free power to tubewells are the first steps". He proposes a 25 per cent hike in tariff to help the Board undertake fresh projects.

A recent study conducted by the Punjab Agriculture University estimates that the total agricultural consumption with a connected load of 26 lakh KW should be in the range of 3,500 million units per year, or around 2,800 million units less than the consumption shown by the Board. Even these 3,500million units, if charged at a rate of Rs 2 per unit, could fetch the PSEB Rs 700 crore.

The replacement of inefficient pumpsets could result in savings of 25 per cent, or 1,500 million units annually, which is half the annual output of the Guru Nanak Thermal Power Plant, Bathinda. With 7.5 lakh tubewells running on free power, there is no incentive to customers to install better pumpsets and matching capacitors. A 25 per cent increase in efficiency here could lead to a benefit of Rs 200 crore annually.

Excessive manpower is another problem. The bulk of the staff strength is in "operation organisation", or the distribution sector. A whopping 70 per cent of PSEB employees nearly 70,000 people belong to this cadre. The hydel sector has 4,000 employees and the thermal sector 8,000, while the transmission sector has 9,300. Engineers form only about 2 per cent of the staff strength, an all-India low.

The PSEB staff has literally been going from strength to strength. Most SEBs have seen a decline inmanpower over the last six years, but not the PSEB. With the regularisation of work charge employees, it has recorded a 14 per cent rise in strength since 1991-92. The all-India average shows a decline of 15 per cent. Delhi, UP, and Rajasthan have all seen a marginal decline in their numbers. Only Haryana, with a 15.5 per cent increase, outstrips Punjab in staff increase. Officials at the Board now say that during the last one and a half years, the number of employees has stabilised and fresh recruitment is rarely resorted to.

Mention the 14 per cent increase over the last six years and the Board attributes it to the opening of new plants. Besides, in Punjab, unlike in other states, almost all works are carried out on a departmental basis. Construction and transmission are also done departmentally, not leased out to contractors.

The hydro-thermal mix too is also causing anxiety among experts. This year, nearly 42 per cent of Punjab’s energy has come from its own thermal stations, while 24 per cent hascome from central purchase. Of this, 13.5 per cent came from its own hydro sources, while 20.5 per cent comes from the Bhakra Beas Management Board. Most experts are of the view that the thermal-hydel mix is not adequate.

The Ranjit Sagar Dam is yet to commence operations and the Shahpur Kandi is yet to see the light of day. The former, which was to be ready for commissioning in July 1999, will now have to wait for another six months due to concreting failure in the penstock. Two units at Lehra Mohabbat of 250 MW each have been commissioned while the thermal project at Goindwal Sahib thermal project (500 MW) has been delayed by negotiations and renegotiations on power purchase agreements.

The Board chairman claims that they have no plans of approaching the World Bank. "Our load management programme, which is monitored daily, has ensured that sales have gone up by 20 per cent last year. We managed to sell power worth Rs 300 crore outside the state without resorting to any price hike."

Countdown todisasterIn 1995, the farm tariff was reduced from Rs 65 per bhp (brake horse power) to Rs 50 per bhp, causing an annual loss of Rs 24 croe.

In December 1996, free power was granted to small farmers holding less than seven acres

In February 1997, free power was announced to all agricultural consumers.

PSEB: Vital statistics

One lakh employees

Half of electricity produced is not charged for

70 per cent of employees are in "operation organisation"; only 2 per cent are engineers.

14 per cent hike in staff over the last six years, whereas other state boards show a decline.