International
Journal of Regulation and Governance
Winners
and losers of the SEB reforms: an organizational analysis Reviewed by S L Rao This short study is based primarily on observations of electricity operations in Andhra Pradesh, Haryana, and Orissa. It makes the point that the reform process now generally accepted for SEBs (state electricity boards) – of unbundling, corporatization, privatization, and independent regulation – ignores a fundamental weakness in the electricity sector, particularly in the states. The SEBs have not been run with a view to maximize efficiency and effectiveness, like a corporate enterprise would normally be. They have been given commercially based accounting rules in 1985 but are not companies under the law. Governments contend that the ‘most serious problem facing the power sector is the lack of investment funds’. But, in fact, substantial improvements – for example, in reducing technical losses, prioritizing transmission over generation investments – were possible within the financial conditions. The World Bank identified ‘political interference’ but the SEBs neither enforced normal remedies to collect bills, nor took bold measures to eliminate non-technical losses. The basic problem is that SEBs are run on executive instructions from governments, eliminating autonomy, accountability, and innovation by SEB employees. The SEBs suffer from cost inefficiencies. Irrational management has to change, for which people have to be changed as has the decision-making process. The SEBs are characterized by the absence of internal discretionary power and an integrated information system. There is a predominance of paper work instead of a focus on cost. Budgets are paper budgets with no managerial freedom to make decisions. Officers spend most of their time on clearing formal requests. Every decision is taken collegially, many times with the involvement of the head office. Information is not integrated and reports cannot be used as centralized managerial tools. Reporting on collections and losses is ex post, precluding any monitoring. Accounts are incomplete and inconsistent. There is no formal discretionary power. Preventive maintenance is negligible. Most of the time is spent on solving breakdowns. Instead of decisions, procedures are followed and paper work is completed. Revenue recovery is secondary. The notion of cost is absent. Public accountancy and not commercial accountancy is usually followed at all levels. What is required is ‘enterprization’, moving from administrative to enterprise in decision-making. This must precede any change in ownership. In all the debates on electricity reforms, the basic issue of managerial styles has been ignored. Unless people, systems, and procedures are changed, no reforms will be effective. This is an important lesson for electricity regulators who find themselves foxed by the apparent nonchalance with which SEB officials accept partial and wrong information, frequently change information and their demands, cannot impose discipline on their employees, and apply misplaced priorities to all aspects of the system. Regulators might be well advised to devote attention to organizational issues of SEBs if they expect their orders to be implemented by SEBs or their successor bodies.
A
watershed in global governance: an independent assessment of the World Commission on dams Reviewed by Kandula Subramaniam The book A Watershed in Global Governance: An Independent Assessment of The World Commission on Dams is an attempt at portraying how an independent organization can be empowered to harness rivers, one of the most important resources of energy, through dams. Except the three Gorges project in China, worldwide, construction
of large dams has faced severe bottlenecks and the WCD’s (World Commission on
Dams’) role in this regard had to be assessed independently to judge whether it
served the purpose. For that, the authors have made an honest attempt to point out how
multi-stakeholder process can play a catalytic role through the experience of the WCD. The
book, which has been divided into nine chapters, introduces the subject elaborately
(taking as many as four chapters), enabling the reader to understand the background before
a judgment is passed. According to the authors, the basic difference between this
commission and the past commissions is that the WCD is based on ‘representation’
rather than ‘eminence’ and bringing all concerned elements and applying them to
an issue was an unparalleled attempt. The authors assess the WCD through three parameters:
independence, transparency, and inclusiveness. In fact, the genesis of WCD, according to the authors, was the result of calls by civil society for an independent review of the global experience with large dams, particularly the role of international aid and credit agencies. For that, the WCD adopted a policy of seeking funding with no strings attached. The authors point out that for WCD, maintaining independence by diversifying funding sources was a major accomplishment that enhanced its broader legitimacy. Even though there has been some compromise on this principle of diversification, there is no evidence to suggest any biases. On the issue of transparency, the authors point out that the commission did not meet the stakeholders’ ‘high’ expectations for information disclosure and point that much of this could not have been managed without unrealistic increases in the length and cost of the process. They say that the commission fell short in meeting the basic norms as in acknowledging stakeholder inputs but are quick to point that such experiences should serve as an important feedback for future multi-stakeholder processes. While those may be the weak points of the WCD, the authors point that the process set in place by the WCD proved to be democratic rather than technocratic. Since its inception, in a short span of time, the WCD had been able to grow and record voices that would have earlier displeased the technical experts. And it is such inclusiveness that sets high expectations for future multi-stakeholder processes. The authors say that it is the WCD process that provided an avenue for greater expression at the national level and stimulated further dialogue across sectors. The full potential of the WCD, according to the authors, lies in the promise of democratization, at both the national and global levels.
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