The Telegraph
Since 1st March, 1999
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Rs 1750-crore support for state power reforms

New Delhi, Oct 26: The Deepak Parekh committee on state specific reforms has suggested investment support of Rs 1,750 crore from the Centre for states undertaking reforms under the Accelerated Power Development Reform Programme (APDRP). This sum has been fixed for the first year with 2000-01 as the base year for calculating improvements eligible for incentives.

The amount of Rs 1,750 crore — which works out to 50 per cent of allocation for the APDRP — may be retained or altered in the subsequent years based on the experience. The remaining funds will be sourced by the states and utilities.

The committee has also suggested that the state governments should take over past liabilities from electricity boards and write off dues to itself, reduce subsidy, improve law and order, and improve payment discipline. It also seeks write-down from existing creditors and refinance at lower rates.

“This is perhaps the last chance the state governments have to undertake the reforms in this sector. The Centre has offered its helping hand and the states should now reciprocate appropriately,” said Deepak Parekh, chairman of Housing Development Finance Corporation (HDFC) and the head of the committee that submitted its report on state specific reforms.

Under the reform-linked incentive support under the APDRP scheme, the committee has suggested incentives reduction in the gap between the overall cost and revenue realised, at the enterprise level.

It has recommended a scheme of one-for-two (Re 1 grant for saving a loss worth Rs 2) that would be exclusive of an exogenous cash induction such as an increase in subsidy.

The report has suggested that SEBs should focus on areas of compact network and dense urban and industrial loads and also develop a mechanism to reduce commercial losses. If the state governments agree to meet performance targets and then fail, funding and clearances for new projects should be withheld, the report said.

The report suggests the setting up of an empowered committee to manage the programme, that could be strengthened with independent financial and technical professionals.

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