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Subsidy cut key to good SEB health

New Delhi, April 5: Union power minister Ananth Geete today stressed the need to reduce subsidy in the power sector to improve the financial health of state electricity boards and announced a Rs 500-crore annual fund for rural electrification.

The minister also announced that the Electricity Bill would be taken up for discussion on Monday and will be passed by both the Houses. All the recommendations made by the parliamentary standing committee on power has been incorporated in the Electricity Bill.

At a recent meeting of the chief ministers on power, the state governments had argued that the subsidy element should be kept in the Bill for a certain category of consumers.

“The state governments have the power to offer subsidy but that has to be given directly to the state electricity boards so that they do not end up facing the financial burden. But the subsidy element has to be removed from the power sector and we have discussed this with the state governments. All the state governments have agreed in principle to remove the subsidy in a phased manner over a period of five years,” said Geete.

Commenting on the Accelerated Power Development and Reforms Programme (APDRP), the minister said the government intends to pursue this programme vigorously over the next five years. This is important to achieve the aim of reducing losses and improving the financial viability of the state electricity boards.

Last month, the government had approved a proposal put forward by the power ministry for an expenditure of Rs 40,000 crore during the Tenth Five Year Plan. The approval has two components — investment and incentives.

Under the investment component of Rs 20,000 crore, the Centre will provide 50 per cent financial assistance to the states to strengthen and upgrade sub-transmission and distribution network. However, special category states like Jammu and Kashmir, Himachal Pradesh, Uttaranchal and Sikkim and the north-eastern states will get 100 per cent financial assistance.

The incentive scheme of Rs 20,000 crore relates to the provision of funds by the power ministry to state electricity boards / utilities for the actual cash loss reduction by way of one rupee paid for every 50 paise saved.

“The SEBs will have to bring down the transmission and distribution loss that also includes the theft up to 15 per cent over the next five-year period,” said Geete.

The minister also emphasised the need for stringent anti-theft legislation. “States like West Bengal, Andhra Pradesh, Karnataka, Madhya Pradesh and Uttar Pradesh have enacted the anti-theft legislation. It is imperative that all other states should follow them,” said Geete.

During the financial year 2002-03, the Centre has released Rs 2,135 crore as against less than Rs 10 crore last year from the APDRP programme out of which Rs 1,756 crore went towards projects and Rs 379 crore as incentives to the states. The beneficiary states were Gujarat (Rs 1072 crore), Maharashtra (Rs 580 crore) and Haryana (Rs 10 crore).

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