Report of Indian Institute of Public Administration ... - Ministry of Power

State Reports (Vol.-III)
Study on `Impact of Restructuring of SEBs’
and accelerated reform process. More importantly, the DPS also envisaged the
eventual disinvestments of the shares in KPCL, as well as the early privatisation of the
distribution companies. It also sought to extend maximum autonomy to the power
companies to manage their business along commercial lines. An Independent Power
Producers’ Policy was also issued in 2001.
FINANCIAL DEVELOPMENT PLAN
The Consultants appointed to develop the Financial Development Plan (FDP) were of
the view that a conventional privatisation strategy would not appeal to prospective
bidders, and proposed the deployment of distribution margin, under which the State
Government was to share substantial risks during a transition period of five years,
while investors would mainly bear the risks of operating costs, capex and penalty for
unsatisfactory performance. The privatisation process was to be by bidding, and the
successful bidder was to hold a minimum of 51 per cent shares in the company.
INTEGRATION OF THE STAFF
Even though the Transfer Schemes provided for the permanent absorption of the staff
in the various new companies, Government of Karnataka could not make it effective
so far because of litigation by concerned employees. The restructured DISCOMs have
been in operation for four years now, and have performed reasonably well. On the
downside, however, they have not attained adequate managerial and financial
autonomy, and are yet to imbibe an appropriate corporate culture among their staff
and managers. Moreover, instead of being a net contributor to the State’s treasury, the
restructured companies continue to depend on Government subsidy.
ACHIEVEMENTS OF THE NEW COMPANIES
Among the achievements of the restructured companies, the most notable ones are the
reduction in transmission losses by KPTCL to a level of 4.18 per cent (which is
regarded as one of the best in the country), the gradual reduction of T&D and AT&C
losses by the DISCOMs, the progress in metering, billing and collection for all
categories except the agricultural segment, increasing investments to improve the
overall quality of power supply, better customer care, grievance redressal mechanism
and higher level of satisfaction. The restructured companies are also more viable units
for managerial control and efficiency. However, there are several areas where the new
companies need to exhibit better performance, including the critical area of financial
performance.
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