Jammu & Kashmir power employees and engineers to boycott work from 18 Dec if the formation of joint venture grid company is not stopped as it is against the interests of electricity workers and consumers


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No. 84-2021/J&K Power                                                                                                    12-12-2021

Sri Manoj Sinha
HE Lt Governor
Jammu & Kashmir UT

Sub: Formation of JK Grid Company -A joint venture of JKTCL and PGCIL in J&K UT.

Respected Sir,
Kindly refer AIPEF letter No.83-2021/J&K Power vide which you were requested to kindly issue direction to authorities to withdraw proposal of Formation of JK Grid Company -A joint venture of JKTCL and PGCIL in J&K UT in larger interest of Power Sector.

2. All India Power Engineers Federation (AIPEF) has gone into detail of the proposal of JVC. AIPEF has given its comments and objections on draft shareholders agreement JKPTCL-PGCIL for your kind perusal. AIPEF is of strong opinion that experiment of unbundling and corporatisation has already failed in other States. Himachal Pradesh is a hill state comparable with J & K. Himachal Pradesh has integrated Utility HBSEB Ltd with Generation, Transmission & Distribution all together. HPSEB Ltd is a successful model of Power Sector. Kerala has also integrated Utility KSEB Ltd. In other States also Power Employees are demanding integration of all Power Utilities like KSEB Ltd and HPSEB Ltd.

3. All J&K Power Employees and Engineers Coordination Committee is the coordination committee of all associations and unions of Power Employees & Engineers of J & K. All J&K Power Employees and Engineers Coordination Committee has sent a letter to Principal Secretary of Power Department of J & K expressing their resentment on the move. They have requested the Govt to put on hold the draft and initiate dialogue with coordination committee. In case draft is not put on hold and Govt proceeds further then Power Employees & Engineers will have no option except to resort to UT level Work Boycott from 18th December 2021.Copy of letter attached.

4. AIPEF requests you to kindly use your good offices and intervene immediately so that the stated draft and process of formation of any JVC is withdrawn and talks are held with representatives of All J&K Power Employees and Engineers Coordination Committee to avoid any unrest in the Power Sector of J&K. AIPEF also wants to intimate you that in case J&K Power

Employees & Engineers are forced to start Work Boycott then Power Engineers & Employees across the country will firmly stand with them and if any victimizing action is taken to crush the peaceful movement then Power Engineers of other States will not remain silent spectators.
With Regards.

Yours Sincerely

Shailendra Dubey

Copy to Principal Secretary to the Government – Power Development Department, Jammu & Kashmir



No. 83-2021/J&K Power                                                                                                             12-12-2021

Sri Manoj Sinha
HE Lt Governor
Jammu & Kashmir UT

Sub: Formation of JK Grid Company -A joint venture of JKTCL and PGCIL in J&K UT.

Respected Sir,

It is learnt that J&K Govt has started the process of formation of JK Grid Company -A joint venture of JKTCL and PGCIL in J&K UT which has created unrest amongst Power Employees & Engineers of J&K Power Development Department. A draft agreement of the proposed Joint Venture between JKPTCL and PGCIL Ltd., circulating into the public domain, is invoking sharp criticism of the hasty manner in which such action has been initiated without taking the employee associations on board.

All India Power Engineers Federation (AIPEF) has gone through provisions of said draft. Comments and objections on draft shareholders agreement JKPTCL-PGCIL of AIPEF are as follows:

1. Integrated function – requirement of electricity generation – transmission distribution

– HPSEB model- also an example of Hill state has proved to be highly successful and should be adopted by J&K.
– At time of unbundling of HPSEB it was proved that unbundling is not a requirement of Electricity Act 2003 and for Himachal the HPSEB functioning has been retained in integrated mode within the framework of Act.
Only Interstate transmission lines are under Himachal Transco. All Transmission Lines, INTRA STATE (within Himachal State), are with Discom HSPEB Ltd. Even 220 kV lines within Himachal (Intra State) are with Discom, and not required to be given /handed over to separate Transco.
– In Kerala also, integrated mode has been adopted successfully.
– In view of highly successful working of transmission in integrated mode with Distribution & generation, GoI should abandon its move to introduce JV in J&K and PGCIL.
– This JV model of any state with PGCIL has not been implemented or worked successfully anywhere in India and such experimentation should not be done in J&K. Instead GOI / MOP should study and adopt system of Hill State Himachal.

2. Coordination between Distribution and Transmission is best achieved when the ownership of Distribution and Transmission is with common owners, i.e., State Govt. Once a JV is introduced at 33 kV level, it will create its own problems of coordination which could be avoided under common ownership.

3. Para 2.1 (a) Page 10/48 stipulates

“Intra State Transmission system right down to 33 kV terminal of 132/33 kV grid transformers”. This means that the boundary between transmission and distribution would be 33 kV terminals of 132 kV grid transformers.
Since transmission is proposed to be under JV it means that boundary metering would have to be introduced for energy accounting of discom, which would increase the costs to be incurred by Discom. Under integrated mode (HPSEB model) such metering can be avoided.

4. The proposed model implies that in a grid substation the incoming lines and transformers upto 33 kV terminal would be owned by JV while the 33 kV bus bars and 33 kV switchgear and 33 kV outgoing lines would be with discom. This would create serious problems in O&M of grid sub stations with one part owned by JV and other part owned by Discom. For example, with one substation being owned by two entities i.e. JV and Discom how the O&M expenses are to be apportioned and how the staff is to be deployed

5. Increased Financial Burden on Discom

When Distribution and Transmission is under one owner (state govt.) the Distribution Company does not have to pay Transmission charges separately as an element of cost.
However, with separate JV Co it means that Distribution Company would have to bear the Transmission tariff of JV separately since ownership of JV is separate.
This Implies that the distribution company will have to bear the extra financial burden of the JV Company tariff straight away.
In other words, since JV co. would be serving only the discom, whatever Transmission tariff is decided for JV would have to be recovered 100% from discom only, and this means it would put additional financial burden on Discom, since JV tariff would include elements such as ROE that would be loaded on the discom, which otherwise could be avoided in integrated working.

6. Financial Matter
Presently, the state discom/state govt. has to bear the expenses of central sector power companies such as NTPC, NHPC, NPCIL, THDC, SJVN PGCIL etc. and it has been observed that due to financial constraints there is delay in payment of bills, and results in interest/ delayed payment charges. With the proposed JV, there will be another party, i.e. JV which will raise Transmission charges bills and this will add to financial distress of the discom / state power department.
In other words, when there is already a delay in payment of central sector bills, with addition of JV bills, the delay would become even more un-manageable. If J&K PDD tries to make timely payment of JV Transmission bills it would result in more delay in payment of other central sector bills, and increased interest charges-leading to more burden on state. Until and unless the state is able to make timely payment of C/Sector bills, it should avoid additional financial burden of JV bills.

7. Non-Functional JERC
The Joint Electricity Regulatory Commission of J&K and Ladakh is presently non-functional.
However, in case of JV Transmission company there will be a number of matters to be referred to JERC and to be decided by JERC, such as
a) Transmission charges
b) Apportionment of charges
c) Commercial disputes between PGCIL & JK Transco
d) Billing disputes
For a JV Company to function it is absolutely necessary to have a functional JERC. Therefore, in absence of JERC the regulatory mechanism will not be there for regulating the functioning of two entities in JV mode i.e. PGCIL and JK Transco.

8. The JERC further has the function to guide the state govt. as under.

Vide Section 86 (2) of E. Act 2003

“The State Commission shall advise the state govt. on all or any of the following matters namely
(ii) Promotion of investment in the electricity industry.
(iii) Reorganizing and restructuring of the electricity industry in the state.
iv) Matters concerning generation, transmission, distribution and trading of electricity or any matter referred to the state commission by that government.”
Un Quote

It may be ascertained whether the JERC has given its advice to J&K Govt as per requirement of sec 86 and sec 88 of E Act 2003.

Vide Sec 88 of E. Act 2003

It is an object of state Advisory Committee to advise the commission on

i) “Major question of policy”

ii) “Protection of consumer interest”. J&K Govt. may check up and verify whether the state advisory

committee has been constituted, and if it has been constituted, whether the advice of the state advisory committee has been obtained as per E. Act 2003.

9. Memorandum and Articles of Association

Vide page 15/148 Para 4.19 (a) the reference has been made to proposed companies Memorandum and Articles of Association – However, the memorandum of Association –MOA and Articles of Association have not been provided anywhere.
Thus the draft of SHA (48 pages) is incomplete. The missing M of A and A of A should be provided.

10. Page 16 of 48 Para 5.1 (f)

Vide Para 5.1 (f) Page 48 the functions of JERC have been stated. However, since JERC is practically non-functional, govt. should first provide the necessary manpower and facilities to ensure that JERC becomes fully functional. In absence of a fully functional JERC Govt of JK should not take up the JV proposal, and keep it pending. Press report on JERC is attached and may be seen.(annex).

11. Page 15 of 48 Para 4.20
Vide Para 4.20 there is provision of appointment of director/ representative of LENDERS. This is a case of back-door privatization and not acceptable.

12. Constitution of STU: Sec 39 of E. Act 2003

From the document of SHA (JV) it is not clear how the STU will be constituted- and whether the J&K Transco will be the STU and if so, what will be the role of JV Company proposed vis a vis STU Functions.
Since STU is a requirement of E. Act 2003, i.e. Section 39 it is necessary to have details regarding STU. Since these details have not been provided, the proposal of SHA is incomplete and should not be considered further.

13. Disputes

When distribution as well as Transmission are state govt. companies, there is no scope for dispute. However, with the formation of a JV, there will be multiple disputes. Article 17 of SHA page 38 of 48 recognizes that Disputes will occur. In this way the function of Transmission will become unnecessarily complicated with disputes, which will not be there when Distribution as well as transmission are both under state govt. without any JV.

14. Manpower and state govt. policy to provide employment.

Every state govt. of the country faces a problem of unemployment and how to provide employment to the unemployed population. In J&K this problem of unemployment is particularly acute.
In case the Transmission function is retained in state govt. without any JV with PGCIL, the implication is that it will provide employment to the unemployed persons of J&K. Conversely, if the JV proposal is adopted it implies that outside state persons will be employed by PGCIL and the high priority of the State Govt to provide employment by state to its citizens will directly suffer.
AIPEF requests you to kindly direct authorities to put on hold the process of formation of JVC in light of above facts in the larger interest of the Power Sector of UT.

Thank you with regards.
Yours Sincerely
Shailendra Dubey

CC: Principal Secretary to the Government – Power Development Department, Jammu & Kashmir


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