Punjab Chief Minister Parkash Singh Badal this month sought yet another extension from the Centre for unbundling the Punjab State Electricity Board (PSEB). However, after allowing nine extensions in seven years, the Union Power Ministry has asked the state to take an in-principle decision and chart out a roadmap for corporatising the PSEB.

The state Government has been dithering over the decision for several years now, citing massive outstanding arrears, even as there are fears that the PSEB’s employee unions could create trouble once this process is rolled out. What unbundling seeks to achieve and why not everybody wants it:

•What is unbundling of state power boards?

The Central Electricity Act of 2003 prohibits state electricity boards (SEBs) from functioning as integrated power utilities. It makes it mandatory to divide them into separate entities for handling transmission, generation, distribution and trading functions.

•How many separate entities does the Act mandate?

Under the Act, there is no restriction on generation, distribution and trading of power, but it is mandatory that transmission is handled by a state-funded entity that is neutral to all players in the power field.

States can opt for their own model. Most states such as Haryana, Orissa, Andhra Pradesh, Karnataka and UP have unbundled their electricity boards into separate companies for power generation, transmission and distribution, while some like Rajasthan have divided the board into five companies — one each for generation and transmission, and three for distribution.

•What does unbundling aim to achieve?

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