Three-Pronged Approach Planned; Funds Outflow Would Be linked To Performance
Criteria , MONEY for state electricity boards, with strings attached
The government has zeroed in on three options to tackle the ticklish SEB reforms
programme. The proposed formula for state-specific SEB reforms will be in the
purview of the revised Accelerated Power Development and Reforms Programme
(APDRP). The new programme is expected to kick off in 2002-03. Linking Central
assistance to measurable milestones is also part of the medium-term fiscal
reforms policy of the finance ministry.
The modification of the APDP would work essentially as a carrot-and-stick
approach. The plan is that funds would be allocated to states on the normal
Central assistances formula. But, the catch is that access to these funds would
not be automatic but linked to measurable targets. The government is weighing
options on three approaches. One, it will allow states to draw funds in a way
that it is directly proportional to the bottom line which will be measured by
reduction in cash losses. It is proposed that reduction funds outflow would be
linked to reforms targets without any specific weightage for each step. Three,
funds outflow would be linked to performance criteria based on specific
weightage.
The performance criteria include putting in place a regulatory framework,
restructuring of SEBs, reduction in T&D losses, curtailing revenue arrears,
plant load factor, manpower reduction and reduction of cash losses. It is
proposed that reduction of cash losses would be given 30 per cent weightage
while setting up of regulatory framework would get 16 per cent. The need for a
relook at the Montek Singh Ahluwalia committee formula has arisen with the power
ministry seeking clarifications on the modus operandi of SEB restructuring. The
bone of contention is that there cannot be a blanket approach to resolve the
problems of SEBs. Similarly, even with the new approach there are problems as
not all states are at par with their initiatives on SEB reforms.
The idea of performance-linked milestones is to enable state electricity boards
to wipe out their cash losses by one-third at the end of three years, the base
year being 2000-01.
The power ministry is looking at coming out with a detailed blueprint on SEB
reforms with a state-specific programme. In the interim, the government plans to
release 25 per cent funds allocation to states for 2002-03 with a commitment
from them that certain milestones would be achieved. It is proposed that
releases from APDRP would be made twice a year and the second tranche would be
earmarked after doing a review of the performance of states.
The incentives performance, unallocated portions of poorly performing states
would be given to states which pull up their socks on SEB reforms.
POWERING AHEAD
How the money will flow for SEB reforms
Milestone Weightage
Regulatory framework 16
SEB restructuring 6
Reduction of T&D losses 21
Cutting arrears 13
PLF 9
Manpower reduction 5
Reduction of cash
losses 30
(in%)
(Courtesy: The economic Times 25-12-2001)
