Report of Indian Institute of Public Administration ... - Ministry of Power

Karnataka
it acquires ‘creditworthiness, which in turn, will attract private investments, and
management skills’. In order to take forward the reform process, the DPS proposed
the ‘reorganisation of the already formed KPTCL by establishing separate distribution
companies (which was done soon after) and their privatisation (which is yet to take
place). Further, the DPS also proposed to transfer the hydro stations which were
entrusted to VVNL to KPCL (which indeed was a logical step) and to affect the
strategic sale of the Yelahanka Thermal Power Station of VVNL through a transparent
and competitive bidding process (which has not been done). The sale proceeds were to
go to the Pension Fund to meet the liabilities of the former staff of KEB / KPTCL.
It is to be mentioned that the DPS also envisaged the eventual disinvestments of the
State Government's shares in KPCL. As an intermediate arrangement, KPTCL was to
act as a wholesale trader, buying power from KPCL and others and selling to the
DISCOMs. The policy also aimed at an Open Access system to be put in effect. After
the transition period, the Government of Karnataka proposed to ensure a completely
level-playing field for all operators and stakeholders, and in particular, ‘would not
provide nor arrange any financing, or guarantee to lenders, which will be the policy
applicable to all generating companies’.
Another commitment in the DPS was the resolve to grant maximum autonomy to all
companies (KPTCL and others) to manage their business along commercial lines. To
what extent this has been done will be examined in the latter part of this Report.
The policy further admitted that in order to improve and achieve better efficiency,
mobilise additional resources, and to improve the quality of services to the consumers,
there was a need to privatise the distribution companies at the earliest, with aid and
advice of the consultants being appointed for the purpose. Besides, it was the intention
that the utilities, particularly the distribution companies started their operations with
a clean balance sheet. As mentioned earlier, this task was carried out adroitly.
In so far as the personnel policy was concerned, the DPS assured that the service
conditions of the staff transferred to the new utilities will be fully protected; but after
the formation of the DISCOMs, they would have the freedom to frame their own
service conditions and recruitment procedures, without jeopardising the interests of
the transferred employees. (This aspect will be covered in detail in the discussion of
the staff issues in this Report)
It will be seen that the DPS is a systematic and well-conceived document and brings
out the reform policy and envisaged procedures in clear and specific terms. Although
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