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

Karnataka
restructuring would indeed yield better results with lesser implementation
uncertainties.
AUTONOMY OF RESTRUCTURED COMPANIES
An important objective of the reform process of the power sector was not only to
invest the utilities with the corporate status, but also to grant them adequate
organisational and functional autonomy to enable them to work independently, with
adequate powers to manage their affairs on a sustainable basis. At the cost of
repetition, the DPS specifically proposed the grant of maximum autonomy to the
restructured companies to manage their business along commercial lines. However,
this has not yet been provided, which is obviously a major impediment to the reform
process. According to the Chairman of the Karnataka Electricity Regulatory
Commission (KERC), ‘the restructuring of the power sector is a failure since
electricity companies are not functioning independently’ 20 . The extent to which the
restructured companies have achieved functional autonomy could be ascertained from
the following developments.
COMPOSITION OF THE BOARD OF DIRECTORS
(i) Karnataka Power Corporation Limited (KPCL)
The Chief Minister of the State has traditionally held the position of the Chairman of
KPCL, which was established in 1971. The Board has the Minister for Energy and the
Adviser to the Minister for Energy as members. Six senior bureaucrats, including the
Secretary to the Chief Minister, Principal Secretary (Energy Department) and the
Managing Director of KPTCL are also on the Board. There are also four functional
directors.
The composition of the Board is indicative of the limited autonomy that the
management will have on policy matters, without being hampered by political
interference. The presence of the CM and the Minister for Energy on the Board of the
Company will not only inhibit free and fair discussions in the Board meetings, but will
also affect its autonomy. Hence, it would be appropriate that the CM and the Minister
must voluntarily step down from Board positions, even if these appointments are
declared as non- profit positions under the relevant law.
The Board must further be reconstituted by including only up to three Government
(nominee) directors in addition to the functional directors. Government of Karnataka
20 Shri K.P. Pande, Chairman, KERC, quoted in The Hindu, dated 26 May, 2006.
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