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Centre calls meet to hasten power reforms

Calcutta, Oct. 17: Unhappy over the pace of power reforms, the Centre has summoned the finance and power secretaries of all states and asked state governments to submit financial turnaround plans by October 26.

Mrutunjay Sahoo, joint secretary and financial adviser in the ministry of power has informed state governments that the turnaround strategy should highlight the quality and quantity of the steps initiated by them and utilities to completely eliminate losses.

“The strategy should clearly demonstrate the time frame in which the state utility is likely to close the gap on a cash basis and the time it would take to break even by covering its full cost. It should bring out a clear-cut business plan,” senior power ministry officials said.

Framing a business plan has become necessary following the recommendations of the committee on restructuring of finance of the electricity utilities headed by Deepak Parekh on accelerated power development reform programme (APDRP). “The ministry wants to implement the recommendations immediately to take forward power reforms. Only a few states have undertaken the reforms seriously,” the officials said.

The committee has suggested measures to be taken by the Centre for utilities that have already embarked on the path of reforms and a turnaround by launching measures to bridge the gap between cost and revenue realisation.

“The committee and the ministry of power would be interested in discussing the details of the turnaround strategy prepared by states for their utilities by taking into consideration the situation and ground realities,” the officials said.

The ministry has outlined the various features that should be included in the turnaround plan. These are: the regulatory measures and steps for improved functioning, legislative measures to create a positive ambience for better performance and attracting future investments, financial engineering for better financial management and administrative measures undertaken for improved working in all segments of business (generation, transmission and distribution).

The ministry has said the above measures and its impact should be clearly brought out on the following aspects of the functioning of the electricity boards and utilities – management and control of fuel cost, improvement in technical efficiency parameters, improved financial controls and fund management, better collection and billing efficiency, other financial and managerial cost control steps, better tariff structure and definite pre-determined subsidy regime.

The West Bengal State Electricity Board (WBSEB) has worked out a revival plan that envisages a wiping out its Rs 800-crore loss and an operating profit by 2004-05. It has also said the transmission and distribution losses should be reduced to 20 per cent from the present level of 40 per cent by 2004-05.

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