The Telegraph
Since 1st March, 1999
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Bengal bombs in power test
- Andhra tops performance ranking

New Delhi, Jan. 10: The final results are out: Bengal has just managed to scrape through the acid test with a marking of 35.9 per cent.

Credit Rating Information Service of India Ltd (Crisil), the leading credit rating agency that has evaluated the performance of the power sector across 26 states based on inputs available till August 2002, says West Bengal’s biggest quagmire has been the issue of subsidies.

“The score of WBSEB has, however, been constrained by the unsatisfactory state of the West Bengal government’s finances, which has led to inadequate receipt of subsidy payments,” it says.

The credit rating agency had been mandated by the Power Finance Corporation (PFC) to carry out a performance appraisal based on the recommendations of the Deepak Parekh committee on power reforms.

These ratings will be used by the PFC to provide preferential allocation of funds for power reforms, setting interest rates or for allocation of power to deficit states from the central pool.

Bihar and all the seven sisters of the northeast — Arunachal Pradesh, Mizoram, Manipur, Nagaland, Assam, Tripura, Sikkim and Meghalaya — have failed in the first-ever examination of the performance of the power sector.

The top honours have gone to two southern states — Andhra Pradesh and Karnataka — with Haryana coming third.

The report said power utilities in Bengal scored low against all financial parameters because of their moderate cash coverage levels, negative net worth, cash losses and large overdues to financial institutions. The average level of receivable payments at 230 days is also very high.

“We expect that the tariff hike would be moderate in the next two years in line with the tariff philosophy adopted by the WBERC (regulatory commission) in the past. In such a scenario, WBSEB’s losses are expected to increase in 2001-02 and 2002-03 as compared with 2000-01 because of inadequate tariff hike and overhead expenses,” the report says. “However, if the WBSEB is able to secure a tariff hike closer to what it has asked for (about 33 per cent), the picture would change significantly,” the report added.

A senior executive in Crisil pointed out: “In the report we had to give some grace marks to the performance of the power sector in Bengal in view of the regulatory uncertainty over tariff fixing. We are unable to project the financial performance of the WBSEB with any great conviction.”

The report has commended the efforts made by the government of Andhra Pradesh to push power reforms and implement directives of the regulator.

“The government of Andhra Pradesh has shown ample commitment to reforming the power sector, which is reflected in the track record of subsidy payments.”

Andhra’s success was attributed to its professional approach, the updating of the business plan for the sector, and its ability to put in place enabling legislation to reform the erstwhile Andhra Pradesh State Electricity Board.

Crisil has also patted Andhra on the back for implementing the regulator’s recommendation to separate the SEB’s functions — generation, transmission and distribution — in a methodical and equitable manner while taking care of the employees.

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