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KSEB Goes Ahead With Sharing Assets For K-FON

Without honouring an interim order from the regulatory commission, the Kerala government is going ahead with the K-FON project, The Lede has learnt.

An Interim Order issued by the Kerala State Regulatory Commission (KSERC) on April 27, had stated that sharing the transmission and distribution assets of KSEB Ltd (Kerala State Electricity Board) for the use of the K-FON project can be done only after getting the formal approval of the Commission.

Citing Section 14, 16, 17, 41, and 51 of the Electricity Act, 2003 along with the Licensing Regulations, 2006, the KSERC states in the order that KSEB Ltd has to get formal approval from the Commission, for sharing the transmission and distribution assets for K-FON project.

However, an October 15 KSEB order has granted sanction to share its assets for the K-FON project.

A query sent to KSERC and KSEB seeking whether KSEB has got approval from KSERC did not elicit a response at the time of this report being published.

A source in KSERC told The Lede that KSEB has not taken any approval so far, but senior officials at KSERC said that they may or may not respond to the email sent by The Lede.

“As it is a controversial issue, details can be sourced only through RTI,” a senior official told The Lede over the phone.

Meanwhile, KSEB has told The Lede that they may try to respond. However thus far, KSEB has not responded to the query.

The K-FON project is meant to build a Kerala wide optical fibre network infrastructure for providing high-speed connectivity to all government educational institutions (approximately 30,000 numbers) and to provide free internet connections to 20 lakhs Below Poverty Line families at Rs 1028 crore.

According to the government, the new fibre pathway is proposed to be created in parallel to the electric power network of KSEB Ltd, and KSITIL (Kerala State Information Technology Infrastructure Ltd) is designated as the implementing agency for the project.

The KSITIL is an apex public limited company formed under the Kerala government for pioneering the development of IT/ITES Special Economic Zones (SEZs), IT Townships, and IT Parks in the state of Kerala.

Interestingly, the KSERC had issued the interim order in April after hearing a petition filed by two KSEB pensioners.

The petitioners contended that there will be serious safety and security threats if K-FON is permitted to use the transmission and distribution infrastructure of KSEBL.

The petitioners stated in the petition that the fibre optic communication system of KSEBL is mostly optical ground wire (OPGW) and the maintenance of the OPGW can only be done by KSEBL due to safety and security reasons as specified by relevant regulations.

Moreover, they added that as transmission and distribution systems are continuously getting upgraded for voltage level and current level which requires frequent dismantling and erection works through the same Right of Way (RoW), dual ownership of assets over the same lead to a conflict of interest between KSEBL and the communication company.

At present KSEB has been getting revenues by renting out its distribution poles, OPGW network, etc. The KSEB gets Rs 65 crore annually from cable TV operators for drawing their cables over distribution poles of KSEBL and Rs 3 crore by leasing out excess fibres as OPGW.

Additionally, the KSEB had already decided to draw 3600 km of OPGW under a reliable communication project funded by the government of India. Once this project is completed KSEB will get an additional income of Rs 21 crore per annum.

According to the petitioners, once the K-FON is on, KSEBL will lose the above mentioned revenues.

“A dual ownership of assets over the same lead to a conflict of interest between KSEBL and the communication company. Once the Joint Venture Company is formed, KSEBL will lose the above revenues,” Premji Easaw Jacob, one of the petitioners told The Lede adding that he is not aware whether the KSEB has got approval or not for sharing its assets for the K-FON project.

Meanwhile, CP George, representing KSEB Engineers Association told The Lede that regulatory approval is mandatory for the utilisation of the assets of KSEB for other purposes. This October 15 order to share KSEB assets is a clear violation of the KSERC interim order.

“The basic objective of the Electricity Act, 2003 is to distance the government from the functioning of the electricity distribution companies. The present intention of the government is to intervene and use the distribution assets created by KSEB Ltd using the public money for information and technology business, which is totally outside the purview of the Act,” he said.

According to George, with the KSEB order, K-FON is going to use the communication potential of the fibre laid down by KSEB for integrated grid operation, grid control, and protection applications.

He said that dual ownership of the assets would lead to a conflict of interest between KSEB and the communication company.

“As the K-FON is a JV with 50% share of KSEBL, if the company is on loss, the loan liability also comes on assets of KSEBL,” he said.

Meanwhile, in the KSERC hearing, on behalf of KSEB, Bipin Sankar, Deputy Chief Engineer, had stated that no asset of KSEB is being handed over to K-FON or is encumbered in any manner for availing loans or servicing debts of K-FON.

“The major source of income for K-FON is expected to accrue from the lease of dark fibre,” the KSEB official had said.

Interestingly, Premji had pointed out that the usage of dark fibres by others may threaten the protection system and cyber security of KSEB.

“There is no need to form another company, but KSEB itself may rent out the dark fibres,” he had said.

Dark fibre – which is also known as unlit fibre or black fibre – is an unused optical fibre that has been laid. It is used in telecom and network communications. While it is currently unused, it is known to be “dark” as no light pulses are being transmitted through it.

However, on November 02, Kerala Chief Minister Pinarayi Vijayan had said in his press conference that, “The K-FON project to provide internet to all by laying optical fibre in 52,000 km in Kerala will be carried out without any deterrence. Nobody will be allowed to derail the project,” he added.

He was responding to media reports that the Enforcement Department is probing the K-FON project as they have M Sivansankar, Kerala IT secretary, and principal secretary of Vijayan, under custody in connection with UAE-Kerala diplomatic channel gold smuggling.

On July 05, some 30 kg of gold, smuggled from UAE to Kerala, was seized by Customs officials at Thiruvananthapuram International Airport. The gold was concealed in a cargo addressed to an official in the UAE Consulate in Thiruvananthapuram.

And in the following days, the National Investigation Agency, Enforcement Department, Customs and Central Bureau of Investigation had stepped into Kerala to probe different angles of the gold smuggling.

In a few days, Swapna Suresh, operations manager at Space Park which comes under Sivashankar’s IT department, Sarith PS, her accomplice, and Sandeep Nair, a Thiruvananthapuram-based businessman were arrested.

Sivashankar was also grilled by different agencies on gold smuggling and money-laundering charges and was taken into custody by ED on October 28.

And on November 01, sources in the Enforcement Directorate (ED) told The Lede that the agency has served notice to Kerala Chief Secretary Vishwas Mehta to provide details of several mega projects promoted by Sivashankar.

The ED has purportedly sought details of Sivashankar’s role in promoting the e-mobility scheme, K-FON, Smart City and Thiruvananthapuram Downtown projects.

Responding to the government’s claim that free or discounted internet will be provided for the poor through K-FON, George said that K-FON is not an Internet Service Provider (ISP) company and so it has to hire a company to provide internet.

“Will someone come forward to give free internet for 30,000 offices and 20 lakh families? No. So who will pay? What is going to happen is that the ISP company will slash its rent which has to be given to KSEB. And what’s the result? KSEB will get reduced rent,” George said adding that, eventually KSEB consumers will have to pay an increased tariff.

“Tariff for KSEB consumers are calculated by analysing spending and income. If income is going to go down, then other than increasing the tariff, there would be no other option,” he added.

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