TNEB has been postponing the trifurcation of itself to fall in line with the central laws enacted as early as 2003. The models which were tried out immediately after the enactment of the Electricity act, had each its own advantages and drawbacks. It was prudent on the part of TNEB not to jump in to splitting itself immediately after the demand came. It was strategically correct to study the effects of the models, the benefits or otherwise of each of the models.
Having studied the model, postponing the splitting on political grounds is also acceptable for a couple of times. But to repeatedly do so is not conforming to the Centre - State spirit envisaged in the constitution. TNEB is much different from the other electricity boards. The act was not intended for efficient boards like TNEB; but the act was also enacted to corporatise the functioning of the Utility so as to make it independent of the state's budgetary support.
Another major purpose of the act is to bring in more transparency to its own functioning. It would bring in the elements in the system which is generating surpluses together with the sinks, which drain out more than these surpluses. It would have brought in more closer management attention as each of three major functions of the utility, Generation, Transmission and Distribution would get its own top management team who will not act on its own priority instead of having to be dependant on a super team!.
TNEBs maximum demand is nearing 10000 MW and its generation is slated to take a quantum leap in the years to come. As an integrated utility its contribution to the renewable sector is laudable. It has used its Hydro power effectively to remove the "Infirm" attributes of wind power and leverage its integral strength to allow these small generators to bank and wheel, effectively providing the much needed incentives to channelise investment. Here again it needs to do more now. We are now facing funds constraint to provide additional evacuation lines, up gradation/ enhancement of capacity of lines which will take the renewable generation to the next levels.
It is not automating its operations and is now lagging other electricity boards in this segment. It has to substantially enhance its Transmission Line grid and become independent of PGCIL by having its own 400 KV network. Other electricity boards have started planning 765 KV grid and TNEB is still comfortable with its 220 KV grid!
On the distribution front, capacity enhancement by way of implementing UG (under Ground)cabling, GIS (Gas Insulated Substations) substations and Distribution automation are the need of the hour.
TNEB always had a pride of place in the national electricity grid and its operations. Over the years it had to bear the ill effects of excessive political intervention, but has managed to still hang in there.
It may not be able to do so, if it does not quickly change its attitude now. May be a firm push from the Central ministry is the need of the hour to save the board.
Moral Policing
Mangalore incident is very shameful. What is even more shameful and worrying is the fact that only a few high end TV channels, are opposing using intricate language which the upper class or the so called educated people who fell visiting Pub is ok wants to listen. Other than this no one worth the name has come out openly against this atrocity.
A few goons enter a place which other wise they are banned from and ill treat, beat up women who in any other place would be more than a match for them and the entire government is pussy footing over this issue. As if on cue, politicians have quickly caught the event and have used it to come on national TV and deliver high moral sound bites, which they themselves do not believe in. All this with a hope that it will bring in the marginal 1 % additional vote which is enough to tilt the scale in their favour.
The entire Mangalore Pub incident was well choreogrpahed and the TV crew was readily available to record the Reality show and beam it on National Channels. What are the names of the people who were beaten up? Which college they belong to or belonged to? What are the current students of that college, their colleagues in the office campuses doing about it?
Are they all so scared that they do not want to come out in the open objecting to it? Or they feel that the treatment met out to their fellow students or colleagues is what they deserved?
Another aspect which is abhorring and I fell absolutely horrendous about, is that this is being done in the name of Hindu Religion. Hinduism gives equal status to women. The scriptures always encourage tolerance and pardons; never brutal public punishment.
Politics and religion are getting dangerously close and upstarts are enacting scripted plays surprising unprepared small segment of persons and getting public mileage to sway public opinion. If we do not get a clear minded leader quick enough, to steer clear of this kind of abysmally low level of politics, we may go the Taliban way soon and our freedom may vanish.
I have stayed and worked in Mangalore and I have always enjoyed the hospitality of Udpi and Mangolereans. I am shocked that such an incident has been perpetrated on them. My sympathies and I prey that one of the localite be it a Hindu or otherwise take this up on himself as a challenge and mobilise public opinion fearlessly to sub due and clearly condemn the so called morale brigades openly so that they don't dare repeat such atrocities in future.
A few goons enter a place which other wise they are banned from and ill treat, beat up women who in any other place would be more than a match for them and the entire government is pussy footing over this issue. As if on cue, politicians have quickly caught the event and have used it to come on national TV and deliver high moral sound bites, which they themselves do not believe in. All this with a hope that it will bring in the marginal 1 % additional vote which is enough to tilt the scale in their favour.
The entire Mangalore Pub incident was well choreogrpahed and the TV crew was readily available to record the Reality show and beam it on National Channels. What are the names of the people who were beaten up? Which college they belong to or belonged to? What are the current students of that college, their colleagues in the office campuses doing about it?
Are they all so scared that they do not want to come out in the open objecting to it? Or they feel that the treatment met out to their fellow students or colleagues is what they deserved?
Another aspect which is abhorring and I fell absolutely horrendous about, is that this is being done in the name of Hindu Religion. Hinduism gives equal status to women. The scriptures always encourage tolerance and pardons; never brutal public punishment.
Politics and religion are getting dangerously close and upstarts are enacting scripted plays surprising unprepared small segment of persons and getting public mileage to sway public opinion. If we do not get a clear minded leader quick enough, to steer clear of this kind of abysmally low level of politics, we may go the Taliban way soon and our freedom may vanish.
I have stayed and worked in Mangalore and I have always enjoyed the hospitality of Udpi and Mangolereans. I am shocked that such an incident has been perpetrated on them. My sympathies and I prey that one of the localite be it a Hindu or otherwise take this up on himself as a challenge and mobilise public opinion fearlessly to sub due and clearly condemn the so called morale brigades openly so that they don't dare repeat such atrocities in future.
Satyam Saga
I was discouraged in not writing about the Satyam Saga in the last few days, given my rather critical views and the impact it may create. But I can not hold on further - so here goes my views.
Satyam is a IT leader which has grown to this level through the sheer aggressive drive of its promoters, their commitment and the hard work of the many professionals whose dedicated effort also made this possible. Somewhere along the line, the same characteristics which made this company reach this level of operation, predominantly risk appetite, has gone awry. Instead of owning up the mistakes, and sharing the risk perception with the major share holders, the management had tried to save the situation and resorted to manipulative ways which drove them to cook up accounts.
The first major mistake which the promoters owners did was to continue to treat the company as their personal fiefdom in spite of becoming minority share holders. Employees and the many institutions which invested had implicit faith in the promoters who had brought fame and good returns to them in the past and were not cunning enough to think otherwise.
What the long term investors did not realise was that the promoters appetite for risk had moved on to more riskier avenues in which they had a belief for the future. May be it is still true; but legally and morally they were bound to take the larger stake holders in to confidence, especially the employees.
The fraud which has been done and is currently hurting the employees and other stake holders could not have been done by a select few and that too in a short time. Many of the 42 vertical heads, their vertical's financial controllers or accountants should have been aware of these. Similarly the HR group should be aware of the excess employee list or the fictional list and the money being drained out. Cash with drawal or miscellaneous accounting expenses (euphemism for political cash expenses) must also have been done with the knowledge of all senior officers of the verticals.
Such practises when not collated and viewed as stand alone events, tend to distort the overall picture. (Each one is doing only a minor bit and that too occasionally ; but put together it all adds up to a very large amount). Employees are caught between the devil and deep sea here. If these expenses do not take place, they may tend to believe that their prospects of revenue protection or statutory clearances do not come in as desired. Even when they know that the promoter is taking the money for his personal operations, they typically turn a blind eye as they believe they deserve it.
This perception should change. Executives with delegation of powers in organisation should oppose such moves, even at their risk of being in the bad books of management. They may loose their job or hurt their career growth; but by tolerating they are becoming criminally liable for false fully accounting and misleading the public.
Another major issue is that of inflating the receivables. This is a practice that typically bring down many an organisation. Any responsible officer can not and should not inflate the receivables quarter after quarter, year after year and continue to report inflated profits. Even when they book the orders at competitive prices, they would have known that the profits are not realisable. It is therefore clear that many in the organisations would have known for some time now that the game is over, but because of their own selfish interests and foolish approach, they continued to believe that they will some how overcome the follies for which they have also been responsible.
This is never done and such an approach can only come to this disastrous end as is seen here. There are many lessons to budding executives here in the Satyam saga and I wish they pick it up for their own sake and the interest of the country at large.
Satyam is a IT leader which has grown to this level through the sheer aggressive drive of its promoters, their commitment and the hard work of the many professionals whose dedicated effort also made this possible. Somewhere along the line, the same characteristics which made this company reach this level of operation, predominantly risk appetite, has gone awry. Instead of owning up the mistakes, and sharing the risk perception with the major share holders, the management had tried to save the situation and resorted to manipulative ways which drove them to cook up accounts.
The first major mistake which the promoters owners did was to continue to treat the company as their personal fiefdom in spite of becoming minority share holders. Employees and the many institutions which invested had implicit faith in the promoters who had brought fame and good returns to them in the past and were not cunning enough to think otherwise.
What the long term investors did not realise was that the promoters appetite for risk had moved on to more riskier avenues in which they had a belief for the future. May be it is still true; but legally and morally they were bound to take the larger stake holders in to confidence, especially the employees.
The fraud which has been done and is currently hurting the employees and other stake holders could not have been done by a select few and that too in a short time. Many of the 42 vertical heads, their vertical's financial controllers or accountants should have been aware of these. Similarly the HR group should be aware of the excess employee list or the fictional list and the money being drained out. Cash with drawal or miscellaneous accounting expenses (euphemism for political cash expenses) must also have been done with the knowledge of all senior officers of the verticals.
Such practises when not collated and viewed as stand alone events, tend to distort the overall picture. (Each one is doing only a minor bit and that too occasionally ; but put together it all adds up to a very large amount). Employees are caught between the devil and deep sea here. If these expenses do not take place, they may tend to believe that their prospects of revenue protection or statutory clearances do not come in as desired. Even when they know that the promoter is taking the money for his personal operations, they typically turn a blind eye as they believe they deserve it.
This perception should change. Executives with delegation of powers in organisation should oppose such moves, even at their risk of being in the bad books of management. They may loose their job or hurt their career growth; but by tolerating they are becoming criminally liable for false fully accounting and misleading the public.
Another major issue is that of inflating the receivables. This is a practice that typically bring down many an organisation. Any responsible officer can not and should not inflate the receivables quarter after quarter, year after year and continue to report inflated profits. Even when they book the orders at competitive prices, they would have known that the profits are not realisable. It is therefore clear that many in the organisations would have known for some time now that the game is over, but because of their own selfish interests and foolish approach, they continued to believe that they will some how overcome the follies for which they have also been responsible.
This is never done and such an approach can only come to this disastrous end as is seen here. There are many lessons to budding executives here in the Satyam saga and I wish they pick it up for their own sake and the interest of the country at large.
Power up Trading
Power sector being in the concurrent list has developed through the years with a state level bias and hence the developments vary significantly across the geography of the country. While the need for national level attention and need to frame policies from a national perspective was understood and action was taken as early as the late seventies, it was confined to Power Generation and Transmission of such power generated by these central plants. Only a few years ago, centre has provided funds and intervened directly for implementation of schemes at the distribution level.
It is now for the implementing agencies to come out in full force and provide the linkages which will help in interconnecting the grids and develop a national market for Power so that Power Traders can play a more active role.
This skewed thinking severely affected the Power market developing as a national one till the enactment of Electricity act 2003. The national policy and act of 2003 is an excellent guide and clearly envisages an integrated network where all key players have a choice which is the fundamental for any market driven approach to creation of a national asset.
It is now for the implementing agencies to come out in full force and provide the linkages which will help in interconnecting the grids and develop a national market for Power so that Power Traders can play a more active role.
However these linkages, as is now the practice, terminate at state level power injection / delivery points and from then on, it is the local network that provides the last mile connectivity even for large power consumers / demand centers. To free the market and Power up trading, it is this last mile connectivity which needs to be freed as envisaged under "Open Access".
To attract investments in this sector, the government has provided one major comfort namely a tariff based approach to guarantee investments, backed by a strong regulatory mechanism. There are severe execution risks posed by issues caused by non availability of right of way to environmental issues, which the promoters should grapple with. Such issues delay the project execution and increase the capital costs. These are beyond the reasonable control of the investor. Providing the incentive of long term cheap funds is one way of balancing these risks.
It is therefore essential that to increase cross regional power transfer capacity significantly together with last mile connectivity, government should identify sources of Long term cheap funds. It could be done by way of providing access to these investors to low cost Long term loans through the Infrastructure Funds being created with our foreign exchange reserves so as to reduce the capital costs of these projects.
The government, should do well to take these steps for bringing in the much needed integration of the grid and making the dreams of Electricity act 2003 a reality.
Credit Policy - Reddy has called it wrong
Reddy has called it wrong this time.
Indian economy is not leveraged asCredit Policy, Housing, much as that of the other developed economies and it is the supply side dynamics which is contributing to the double digit inflation. Some even argue that this effort of the central bank may further accentuate the problems caused by supply side dynamics due to the capacity addition being delayed mainly due to the steep increase in funding costs.
The policy initiatives of the nineties have dismantled the Long term Funding institutions, which has pushed India Inc to look at the global markets for raising long term funds. Having taken this route they are now forced to call correctly the exchange rate movement. The companies which are not capitalized adequately, or are afraid to go to the international market for want of loosing control, silently suffer. This in the long term, affects the economy as planned capacity additions do not take place. Policy makers have failed to acknowledge this void and take steps to correct.
At the other end of the spectrum, the needy do not have any access to institutional funds. Attempts to eliminate the usury rates charged by the middleman have failed miserably. With the so called growth in bank credit being fueled by indiscriminate lending to salaried and self employed persons for consumer durables and lavish spending, it is repaying time for these institutions, with even the central bank taking special interest in these advances. Defaults in certain locations are a staggering 40 % in this segment, if we are to believe unconfirmed reports.
For lending to the housing segment and make it robust, we have important lessons to learn from US. The Fed had openly issued government guarantees to Fannie Mae the share holder owned financial institutions with a public mission. These institutions are private in nature but backed by the government. Hence these banks could approach the international market to raise cheap funds and provide funds exclusively for the domestic housing market.
It is time we also did the same thing. The government should guarantee the bonds issued by say a division of ICICI or AXIS or HDFC bank or a combination of the divisions of the banks with a caveat that funds raised thus are exclusively used for a defined housing market.
In the last 3 years the housing sector saw a robust growth and provided the much needed overall growth in GDP. The current attempts by the central bank to chase the inflation is hurting these segments and will once again deprive many a citizen the chance of owning a home in his or her life time. Will the government at least intervene?
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