| Reaching out
New Delhi, Jan. 21: Prime Minister Atal Bihari Vajpayee has asked the power ministry to rework the Electricity Bill to make it more comprehensive and acceptable to all states without compromising on the actions required to accelerate power sector reforms.
However, bureaucrats in the power ministry are in a fix, since they have been asked to incorporate major recommendations of the parliamentary standing committee on power.
The most important suggestions include providing powers to state governments to decide on tariffs and delinking the subsidy element from the allocation of financial assistance to states to pursue reforms.
“It is a difficult call. How does one push ahead with the reform process if we compromise on the two most important elements: that an independent regulator rather than the state government must fix the tariffs, and subsidies must be borne by the state governments if they choose to dole out concessional power to certain groups of consumers,” said power ministry sources.
“We have held consultations with the various other departments, like the finance ministry and with the officials from state governments. The main problem is the composition and powers of regulatory framework in the states and to delink the assistance from subsidy,” said sources in the power ministry.
“We have been given a go-ahead from the Prime Minister to hit the subsidy element that is proving to be detrimental to the financial health of state electricity boards. But at the same time we may have to incorporate a clause that will allow the state governments to offer subsidy through budgetary provisions and also to keep such a tariff to be fixed by them out of the purview of the power regulator in the state,” they said.
The power ministry is also likely to introduce a clause that will allow the creation of a special fund for the purpose of providing uninterrupted quality power at subsidised rates to various sectors like hospitals and educational institutions. The gap between the actual cost of power and rate at which it will be supplied to these sectors will be secured from this fund.
“It is a proposal that we are examining but have not yet decided to incorporate in the Bill. There are various issues like the corpus of the fund and the annual cess that has to be recovered to generate resources for the fund,” sources said.
The power ministry is currently drafting a presentation that will showcase the progress made by the sector until date and the gap that needs to be filled over the next 10 years. “We are likely to make this presentation to the Prime Minister by early next month. It will also have the salient features of the Electricity Bill that is likely to be passed in the budget session of Parliament,” sources said.