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

Tamil Nadu
Board and the Government, but also an energy drain. With no cost to themselves,
farmers do not seem to be much concerned about energy conservation measures; they
have no incentive to install energy-efficient motors or energy-saving devices or to go
in for water-saving crops; sometimes, they do not even bother to switch off motors,
wasting energy. Also, the Board incurs further losses due to the low power factor of
the rural grid in addition to the huge cost it has to incur on capital expenditure to lay
long lines in remote areas. This policy has led to lowering the water table in the State,
which results in higher energy consumption year after year. The Government has not
been able to compensate the Board adequately for this loss. It is doubtful whether the
Government will fully compensate the Board ever in the future, since the financial
position of the Government is also not sound.
Another major weakness of the Board is that it is bloated with a huge staff. From the
figures given by the Board, it is clear that it is conscious of this – it has been able to
reduce the number of employees from 93,721 in 2000-01 to 79,773 in 2004-05, a
commendable job indeed. The system of employing contract workers and a constant
demand to regularise their service have added to the staff cost considerably in the past.
The Board should guard against repetition of the same mistake, as demand for this is
constant. Further, employees who have become redundant are still in position, and
they should be retrained and used productively. Work norms for various categories of
employees have been liberally fixed – so liberal are the norms that the thermal stations
are three-times over staffed as compared to the NTPC’s stations. Any major gain in
this area is possible only with the support of the unions, which are highly fragmented
and have considerable political clout. Although employees are individually convinced
of the need for reform in this area, unions are resisting any change, and successive
managements have not been able to convince them and bring about sharp reduction in
employee cost.
The third area of concern is the cost of power purchased from IPPs. Agreements with
them had been entered into with a pass-through cost of fuel charges. As per the PPA,
the Board will have to pay take-or-pay charges even when it does not consume any
energy from the IPP – in fact, it is paying these charges for at least one project. These
are agreements, which the Board signed in the heydays of private sector entry into
power generation and under the then-existing conditions and policies. The Board has
resorted to merit order despatch to somewhat reduce the cost of the purchased power.
Some scope for further reduction of this cost exists, but it calls for political will and
sharper negotiating skills.
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