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12 August, 2005ICEM News release No. 75/1998
How can everyone be guaranteed access to electricity in a country whose population will reach one billion by 2001? Where will the finance come from for the 8,000 MW of new capacity needed each year to meet a 10 percent increase in demand?
India has no alternative but to allow private investment in power generation. That was the conclusion today from 250 delegates at a trade union international energy conference in Delhi, India.
But private investment does not mean privatising the existing utilities. Indian state-owned thermal power generation giant NTPC wins praise even from the World Bank for its efficiency. Transmission company Powergrid and the State Electricity Boards have managed to achieve an electrification rate of 85 per cent, which is a respectable figure for a huge, predominantly agricultural country. It is doubtful whether any private investor would care to cater for the specific social tasks related to distribution to remote areas, farmers and the poor.
Organising the Delhi conference was the Indian National Electricity Workers' Federation (INEF), which is affiliated to the 20-million-strong International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM).
Private and foreign investors should not be favoured by guaranteeing them excessive profits and tax holidays as the Indian government is doing now, the unions insisted.
For instance, the government has guaranteed energy multinational ENRON a 16 per cent rate of return on the gas-fired power plant that the company is now building in India. That means 700 million US dollars per year of guaranteed profit for ENRON, which has also been granted a five-year tax exemption by the Indian government. And in case of oversupply, ENRON will have the right to keep generating at full capacity, while Indian generators will have to shed load.
The Indian electricity sector has only recently opened up to foreign investment, but the government has already approved deals worth billions of dollars.
Proper regulation must provide a level playing field for private and public generators, the union conference said.
The dire economic straits of the State Electricity Boards require prompt action. Their annual losses amount to billions of dollars, mostly due to their subsidising electricity prices to farmers. While acknowledging that a poor rural population could not afford charges high enough to cover electricity production costs, the electricity workers feel that power pricing should be supported by direct state subsidies, not by ruining the finances of distribution companies.
Management representatives promised to sit down with the unions and study how to develop work organisation for the future. True partnership and extensive training will be needed in the new competitive environment.
In conjunction with the conference, the ICEM held a sub-regional workshop for South Asian electric power unions. As the governments of India, Pakistan, Bangladesh, Nepal and Sri Lanka are discussing a cross-border power link, the unions decided to intensify their co-operation. The ICEM will support them as part of its energy workers' networking project for the Asia-Pacific region.
India has no alternative but to allow private investment in power generation. That was the conclusion today from 250 delegates at a trade union international energy conference in Delhi, India.
But private investment does not mean privatising the existing utilities. Indian state-owned thermal power generation giant NTPC wins praise even from the World Bank for its efficiency. Transmission company Powergrid and the State Electricity Boards have managed to achieve an electrification rate of 85 per cent, which is a respectable figure for a huge, predominantly agricultural country. It is doubtful whether any private investor would care to cater for the specific social tasks related to distribution to remote areas, farmers and the poor.
Organising the Delhi conference was the Indian National Electricity Workers' Federation (INEF), which is affiliated to the 20-million-strong International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM).
Private and foreign investors should not be favoured by guaranteeing them excessive profits and tax holidays as the Indian government is doing now, the unions insisted.
For instance, the government has guaranteed energy multinational ENRON a 16 per cent rate of return on the gas-fired power plant that the company is now building in India. That means 700 million US dollars per year of guaranteed profit for ENRON, which has also been granted a five-year tax exemption by the Indian government. And in case of oversupply, ENRON will have the right to keep generating at full capacity, while Indian generators will have to shed load.
The Indian electricity sector has only recently opened up to foreign investment, but the government has already approved deals worth billions of dollars.
Proper regulation must provide a level playing field for private and public generators, the union conference said.
The dire economic straits of the State Electricity Boards require prompt action. Their annual losses amount to billions of dollars, mostly due to their subsidising electricity prices to farmers. While acknowledging that a poor rural population could not afford charges high enough to cover electricity production costs, the electricity workers feel that power pricing should be supported by direct state subsidies, not by ruining the finances of distribution companies.
Management representatives promised to sit down with the unions and study how to develop work organisation for the future. True partnership and extensive training will be needed in the new competitive environment.
In conjunction with the conference, the ICEM held a sub-regional workshop for South Asian electric power unions. As the governments of India, Pakistan, Bangladesh, Nepal and Sri Lanka are discussing a cross-border power link, the unions decided to intensify their co-operation. The ICEM will support them as part of its energy workers' networking project for the Asia-Pacific region.