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

State Reports (Vol.-III)
Study on `Impact of Restructuring of SEBs’
revenues from business of these companies, which shall be utilised through a special
cash flow mechanism. It has been indicated that this arrangement is intended to last
during the transition period.
State Government Role and Structural Financial Support
The Financial Restructuring Plan (FRP) was prepared by MPSEB and updated in
November 2005, which, however, has not been formally approved by the State
Cabinet. The important assumptions used in Financial Projections were that the
AT&C losses will be reduced from 51.6 per cent in 2004-05 to 32.5 per cent in 2011-
12, collection efficiency would increase from 85 to 96 per cent and capital
investments to the tune of Rs 18,825 crore would be made into the sector. Also, there
shall be a regular year on year increase in the retail tariff. Implementation of the
proposed FRP is expected to turn around the MPSEB by 2011-12. The State
Government's commitment to a total cash outflow would be approximately Rs 6,881
crore during the seven-year period of FRP. However, there would be an inflow of
around Rs 8,623 crore to the State Government from MPSEB, resulting in a net
outflow of around Rs 1,741 crore to the State Government.
Role of MPSEB
The reform model provides for a unique functional role of MPSEB after the
restructuring. MPSEB has transferred all functions including assets of the erstwhile
Board vide Madhya Pradesh Electricity Reforms Transfer Scheme Rules, 2006 to the
respective Utilities. It has retained two principal functions, viz., the first, relating to
cash management during the transition period and the second, to act as principal
employer till the staff gets allocated amongst the Utilities. Although, MPSEB will be
the principal employer, full powers relating to punishments, dismissal, etc., has been
vested in the CMDs of the respective utilities. The State Government officials feel that
this arrangement was also necessary because of the dispute over the assets and
liabilities pertaining to the erstwhile Board of the undivided Madhya Pradesh and the
newly created State of Chhattisgarh.
REORGANISATION OF THE STATE
After bifurcation of the composite State of Madhya Pradesh, 12 per cent of the generic
and project related liabilities were transferred to Chhattisgarh, 88 per cent of this
burden was put on MPSEB.
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