VOICE
OF ELECTRICITY WORKERS
Oct-Dec 2001
Vol 2 No.4 Index
THE STATE OF POWER SECTOR REFORMS POWER
POINTS: DISTRIBUTION REFORMS
B.S. MEEL
After five years of initiation of power sector
reforms in Orissa, losses of the privatized distribution companies in
the state have crossed Rs 1,000 crore. According to information
available with the power ministry, net worth of these companies is
negative and their ability to borrow in the market for capital
investment has been eroded. However, they continue to have access to
the state government loans, provide by the World Bank.
Further, the state-owned transmission company, Gridco, which is
also the monopoly buyer of power generated in the state, is unable
to recover dues from the private distribution companies and is
carrying accumulated losses/receivables exceeding Rs.1,500 crore.
This is despite the increase in power tariffs five times in the
last five years. The State Electricity Regulatory Commission
regarded these tariffs as rational and consistent with financial
viability, provided the private sector distribution companies
function efficiently.
Montek Singh Ahluwaila panel, in its initial report on
restructuring of the state electricity boards (SEBs) has pointed out
that the system in Orissa seemed to be facing impending bankruptcy.
“ The quality of supply has not improved materially and there has
been little new investment”.
In a major shift from the earlier trend new distribution models
are being evolved as well. It is no longer necessary to just
unbundle. In fact it has been noticed that unbundling has led
problems for the entities. The Centre is now offering errant states
a bunch of solutions to choose from along with some financial
carrots to make the package attractive. The news is the states seem
serious this time round. The bad news is intent is not enough to
turn SEBs around. Customised solutions with various models and
financing options are being worked out for SEBs and the centre is
even considering major clean up operations to allow them to start
afresh. Backed by commercial considerations and working against a
target of break even in two years. The states will now have the
option of choosing from a variety of solutions on offer from central
policymakers.
Power Points: Distribution Reforms.
? Realisation of traift through independent regulatory commission.
? Transparent policies on subsidies
? Minimum agricultural tariff
? 100% metering and energy audit
? reduction of T&D losses through (a) elimination of theft and (b)
strengthening/upgradation of sub-transmission and distribution
system
? Exploring possibilities of privatisation of distribution
? Decentralised distribution management in rural areas.
The GOI will invest about Rs.4500 crore for revamping the
distribution network in 60 power circle of the country with a view
to make them centre of excellence with a spend of Rs. 75 crore per
district in this fiscal. Most of the funds for the project would
come from the centrally sponsored accelerated power development
programme. The current year allocation of Rs. 1500 crore for APDP is
being doubled to fund distribution reforms. The Power Minister would
be approaching cabinet soon for investment of upto Rs. 50,000 crore
to initiate similar distribution revamping programme in about
remaining 350 power circles to convert into profit centre. The cost
of revamping distribution system would be shared equally between the
centre and the states. The focus now is on metering all consumption,
improving quality of power and checking theft. Differences have
sprung up between the expert group on power and the GOI about
allocating Rs. 10,000 crore to states as compensation for allowing
open access to bulk consumers of power by passing SEB’s. In its note
to the expert group the Planning Commission has said that since the
Cabinet has decided that open access will only be introduced in
phases, there is no need to provide a compensating sum to states for
their potential revenue loss from the measure. The sum is part of
the Rs. 40,000 crore that the group has suggested by way of central
assistance for the power sector that will be provided through the
modified APDP.
Instead the plan panel which operates the APDP scheme along with
the nodal power ministry has suggested that it will be better to
hike the allocation for meeting T&D loss to Rs. 20,000 from Rs.
15,000. It has also recommended that 50 per cent of this should be
set apart as incentives for states that achieve the milestone and
the rest may be sanctioned as per the recommendations of the
monitoring committee. Justifying the measure that “any measure to
have the desired effect should also have an element of disincentive
for the non-performing states”.
In a desperate bid to step up investments in the power sector GOI
has asked the chief minister to increase funds allocations for the
sector in the state plans. Not only this, also approached the
planning commission to make it mandatory for states who approach the
Planning Commission to get their annual plans for the state approved
to step up allocation of funds for the power sector. The GOI has
stated that there is no alternative to increase public sector
investment in generation as substantial private investment in
generation would flow only after reforms succeed in restoring the
financial viability.
There is virtual panic in the power ministry as for the last two
five year plans the generation capacity additions have been far
below the target. During the Ninth Five year Plan instead of
targeted 40,000 MW capacity addition, actually less than 20,000 MW
is expected to be added finally. The 50 per cent shortfall in this
target could create a crisis situation in the coming years with
power shortages.
RED INC : STATE-WISE STATUS REPORT
Commercial Profit/Loss
Without Subsidy (Rs crore) Rate of Return On Capital
Without Subsidy (%)
’97-98
provisional ’98-99
(RE) ’99-00
(AP) ’97-98
provisional ’98-99
(RE) ’99-00
(AP)
Andhra Pradesh -1376 -2263 -2703 -33.95 -50.15 -56.66
Assam -411 -306 -336 -38.88 -28.02 -29.39
Delhi (DVB) -760 -961 -794 -28.58 -32.52 -23.30
Gujarat -1274 -1440 -1498 -27.83 -30.16 -34.51
Haryana -765 -532 -502 -47.79 -33.27 -31.34
Karnataka -331 -604 -365 -17.00 -27.09 -14.24
Kerala -199 -612 -451 -17.05 -9.44 -19.29
Madhya Pradesh -941 -1288 -1966 -13.04 -30.47 -48.18
Maharashtara -11 -115 214 -0.14 1.37 2.22
Orissa -287 -405 -186 -14.85 -21.44 -8.61
Rajasthan -386 -577 -882 -13.81 -20.07 -21.92
Tamil Nadu -318 -855 -709 -5.23 -14.19 -11.01
Uttar Pradesh -1853 -1991 -2142 -13.21 -13.47 -12.88
PLAN & ABLE
Capacity Addition In Previous Plans
(in MW) CHARGED UP:
Projected Capacity For 10th + 11th Plan Period
Plan Target Achieved %Achieved of target (in MW) THERMAL HYDRO
NUCLEAR TOTAL
Coal Gas/Diesel Total
VIth PLAN 19666.00 14226.00 72.3% Private Sector 27944 11571.9
39515.9 4230.0 0 43745.9
VIIth PLAN 22245.25 21401.64 96.2% State Sector 6905 1213.4 8118.4
9732.5 0 17850.9
VIIIthPLAN 30538.00 16422.60 53.77% Central Sector 17500 2600
20100 20155 4880 45135
IXth PLAN 40245.5 likely to be 19000 48% TOTAL 52349 15385.3
67734.3 34117.5 4880 106731.8
The power ministry launched a 45-day mass awareness programme
beginning 15th October 2001 on the need for implementing power
sector reforms, during the course of which around 2,000 roadshows
would be held across the country to involve all the stakeholders
including state electricity boards and the consumers to take them
into confidence to implement the power sector reforms. The GOI
feeling that the country was losing about Rs 20,000 crore annually
on account of power theft and the problem cannot be tackled by the
government alone. The governments efforts have to be supplemented by
state governments and local governments, that “power theft cannot be
checked without a people’s movement.”
System to Monitor power Segment Activities
Recently GOI has chosen Delhi, Goa and Union Territories of
Pondicherry and Chandigarh (due to their small size) to become model
states for power reforms for the implementation of measures needed
for reforms. A management information system (MIS) was being
developed with the cooperation of CEA and the ministry of
information technology to monitor the working of power system
through out the country. This system will be on-line and real time.
In addition administrative and managerial changes, which will bring
in accountability are also being contemplated. These measures would
have to be implemented by state governments if they are to become
eligible for support from the centre and the needed to revamp
infrastructure, administration and managerial systems before tariff
rationalization occurs in the states.
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