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

State Reports (Vol.-III)
Study on `Impact of Restructuring of SEBs’
structured human resources network for each restructured company, at the earliest.
This must be a matter of priority.
It may be a wise investment to offer adequate and sufficiently attractive incentives to
the transferred personnel to encourage them to opt for the revised corporate entities.
This must be supplemented with an appropriate communication strategy to educate the
staff members on their career prospects so that they shed their misapprehensions and
volunteer to get absorbed in the DISCOMs.
CONTINUATION OF THE SUBSIDY PAYMENTS
Power sector reforms aim at substantial reduction and the gradual elimination of the
government subsidy to the sector. It is no one’s case that the subsidy that the sector
has been enjoying for decades could be wished away overnight by merely
restructuring the Electricity Boards. But the entire restructuring exercise was initiated
with the objective of reducing and eliminating the continuing subsidy and to make the
sector self-supporting and sustainable in the shortest possible time frame.
As mentioned earlier, the State Government has been giving considerable subsidy
support to the power utilities in the State. . Even after almost a decade of the reform
efforts, there is no let up in the provision of subsidy to the sector. The ten-year
Financial Restructuring Plan (FRP) for the power sector approved by the State
Government envisaged that the government support to the sector would be Rs 8,999
crore till 2005, including a direct subsidy of Rs 6,750 crore, debt service on trade
bonds to CPSUs of Rs 555.30 crore, cash subsidy for past power purchase dues of Rs.
200.40 crore and pension contribution of Rs. 785 crore. Additionally, the liability for
the past pension obligations till the restructuring of the KEB would continue. At the
same time, a turnaround of the finances of the sector was expected in the five-year
period to follow (i.e., by 2006-07). The FRP assumed annual revision of tariffs, annual
reduction of losses, 100 per cent collection efficiency, and adequate capital
investments supported by external funding. Following this, Government of Karnataka
also published the Medium Term Fiscal Plan (MTFP) for the State for the period up to
2004-05 during the budget session 2001-02, which announced drastic reduction of
implicit and explicit subsidies to the power sector “through economic pricing,
improving productivity in generation, transmission and distribution and metering the
consumption of electricity by the agricultural sector and privatisation of distribution”.
The MTFP, among other things, sought to link the power sector subsidy to reduction
in T&D losses (from the then existing level of 37.5 per cent to 25 per cent in 2005-06,
through gradual annual reductions), and regular tariff increases. The first Balance
3.32