KOCHI: How will Kerala view the new move asking states to attract more private capital to accelerate the expansion of its power transmission network?
As the Centre unveils its ambitious $107 billion grid expansion plan to modernise the nation’s power infrastructure and accommodate clean energy, Kerala may find itself at a crossroads.
Talking to businessbenchmark.news ,a top labour union representative said the Centre’s ambitious project to attract private investment in power transmission networks expansion could face resistance from Kerala, where the government has long opposed privatising public utilities.
“The state’s Left Democratic Front (LDF) government, firmly opposed to privatisation, faces the challenge of balancing ideological commitments with the pressing need for infrastructural upgrades,” he said..
With Kerala State Electricity Board (KSEB) Ltd – its sole power provider – struggling under the weight of negative net worth and massive borrowings, the Centre’s call for states to monetise transmission assets poses significant political and practical dilemmas.
The Central Electricity Authority (CEA), in its report, urged states to monetise transmission assets to fund new projects. For Kerala, however, this approach conflicts with its long-held stance against privatisation, even as its sole power provider, Kerala State Electricity Board (KSEB) Ltd, struggles with mounting debts.
The Centre’s stand
The federal government’s plan aims to modernise the grid to accommodate India’s growing clean energy ambitions while meeting the rising demand for power. It involves monetising state-run transmission assets by leasing them to private entities for a specific period, generating predictable cash flows for investors and reinvesting proceeds into new infrastructure.
The CEA highlights this model as a less risky and more attractive way to draw private investment into a sector that requires significant capital but is constrained by government budgets.
Kerala’s dilemma
The Left Democratic Front (LDF), which governs Kerala, has consistently maintained that public utilities should remain under state control to safeguard consumer interests and prevent profiteering.
The state’s Industries Minister P Rajeev had earlier told this writer during an interview that the state would not privatise any of its public sector undertakings, even industrial units, in order to make them profitable or more efficient.
This ideological commitment to public ownership, however, comes at a cost. KSEB’s financial woes have limited its capacity to undertake the large-scale infrastructure development needed to keep pace with growing demand and renewable energy integration.
Challenges
For Kerala, adopting the Centre’s monetisation model poses both political and practical challenges.
The LDF government views privatisation as a step towards eroding public sector control and compromising the affordability of essential services. Implementing the Centre’s recommendations could invite criticism from the ruling coalition’s core voter base, including trade unions and consumer rights groups.
While the Centre sees private capital as a solution to funding gaps, Kerala’s financial predicament makes it difficult to secure private interest. Investors are likely to demand assurances of predictable revenues and payment security – conditions that KSEB Ltd, with its precarious financial position, may struggle to guarantee.
Renewable Energy
According to a power sector expert, Kerala has ambitious renewable energy targets, yet its ability to achieve these goals depends on modernising the state’s transmission infrastructure. Without private capital, funding these upgrades could stretch state finances further.
Experts suggest that Kerala could explore alternative models to balance its ideological stance with practical needs. One possibility is forming public-private partnerships (PPPs) where the state retains majority control while leveraging private expertise and capital for specific projects. Another approach could involve creating state-controlled entities to manage monetised assets, ensuring that revenues remain within the public domain.
The road ahead
As India moves forward with its $107 billion grid expansion plan, states like Kerala will need to reconcile their ideological commitments with the financial realities of modern infrastructure development. For now, Kerala’s stance underscores the complexity of implementing a one-size-fits-all approach to privatisation in a country with diverse political and economic landscapes.
