Part 1- Saying yes to IPO of power distribution company means accepting its privatization
By Shri Girish, Joint Secretary, Kamgar Ekta Committee (KEC)
Due to the opposition by electricity workers and consumers across the country, Central government and various state governments have been forced to camouflage their actions towards privatization of power sector in different words. Various government officials and Ministers, constantly try to say that all their actions are actually to better serve the interests of electricity consumers – “Smart meters bring smart technology which will help reduce transmission and distribution losses”; “parallel licensing will give consumers choice to choose the electricity supplier who is more efficient”- such is the language used.
However, working people have started seeing through these falsehoods. A good example of this is the fact that just a couple of days ago, the united opposition by electricity workers, farmers and other electricity consumers of Karnataka forced Tata Power to withdraw their parallel licensing application. This victory of people’s opposition will surely encourage working people of Maharashtra, too, to discourage further entry of private players in electricity distribution.
The policy of globalization by liberalization and privatization was ushered in by the Congress Party led Central government in 1991-92. Since then, most of the big parties or coalitions, which have formed government at Centre or State levels have pushed the privatization program, some a bit more aggressively than the others.
Listing shares of PSEs on stock exchange, by issuing Initial Public Offer (IPO) has been one preferred and hidden method of privatization which was pursued by all the governments at the centre, since 1991-92.
The first IPO was done in 1992-93 itself. Since then, IPOs of more than 30 major Central Public Sector Enterprises (PSEs) have been issued. The Hindustan Petroleum Corporation Limited was the first PSE to have an IPO and get listed on the Bombay Stock Exchange in 1992. This was followed by IPO of the State Bank of India in 1993.
Major Central PSEs for which IPO have been issued are NTPC, Power Grid, Oil India, Coal India, IOCL, ONGC, LIC, PNB, BOI, Union Bank, etc.
If suddenly the Central Government shareholding is reduced dramatically by an IPO, there will be outcry and opposition from people. Leaders of major political parties understand this very well. Hence, as a first step the IPOs are issued for 5-10% of Government of India shares. Then they are followed by Follow on Public Offers (FPOs) to sell more and more shares. For almost all the Central PSEs such FPOs have been unleashed thus reducing the shareholding of Central Government gradually. As of now IPOs and FPOs of approximately 70 Central PSEs and Public Sector Banks (PSBs) have been carried out.
As a result of repeated sale of government shares, the government shareholding in 20 PSEs has already fallen to less than 60%. The government shareholding in the country’s largest bank, the State Bank of India, is now only 55.5%; in the country’s largest power generating company, the National Thermal Power Corporation (NTPC) it is only 51.1%; it is between 51% to 53% in Bharat Petroleum Corporation (BPCL), Power Grid Corporation (PGCIL), Bharat Electronics Ltd. (BEL), Hindustan Aeronautics Ltd. (HAL), Mahanagar Telephone Nigam Ltd. (MTNL) and National Aluminium Co. Ltd. (NALCO).
There is now a proposal to reduce the minimum shareholding of the government from 51% to 26% for it to be considered a Public Sector Enterprise. This proposal will make the government a minority PSEs.
It is evident that an IPO is nothing else but the stepping stone towards privatisation of a PSE.
The experience of workers of PSEs where there have been IPOs and multiple FPOs is a valuable guide for workers of PSEs which are going for IPO. The experience of workers in PSEs and PSBs, wherever IPO and FPOs have been carried out, shows that they lead to:
- Increased work load
- Threat to job security
- Threat to terms of employment
- Increased contractualization
- Loss of bargaining power
And for consumers it has meant
- More expensive service
In order to lure workers and to blunt their opposition, the government often reserves a certain quantity of shares on sale for employees. Sometimes it even offers shares to employees at a price lower than the price offered to the general public. Some employees do earn a profit of a few lakhs in 5-10 years by selling their shares. But a majority of the employees and workers are stay away as they do not wish to sacrifice their long term interests for a short term gain of a few lakhs of rupees. (An employee cannot be allotted shares of value of more than Rs 5 lakh, as per the regulations of Nation Stock Exchange.)
The government and others with vested interests also make lot of propaganda that by holding a handful of shares, workers become part owners of the company for which they work.
We cannot forget that, we the working people of this and previous generations, have built these massive PSEs with our labour and our money, and they should be operated to benefit all of us, instead of benefiting capitalist class.
Saying “yes” to IPOs and FPOs by workers means accepting privatization of the enterprise, sacrificing their own job security, accepting that their own children and grandchildren will work as contract workers, without any job security and under inhuman working conditions, and sacrificing society’s interests!
It is thus very clear as to why, not only the electricity consumers but also workers of Maharashtra’s power sector need to urgently unite and prevent Maharashtra Government’s IPO for Mahavitaran, Mahapareshan and Mahanirmiti.