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

Orissa
The difference of Rs 46.33 crore (Rs 128.02 crore - Rs 81.69 crore) in the depreciation
(which also included depreciation of assets created during 1997-98) formed only 3.2
per cent of GRIDCO's total revenue requirement of Rs 1,451 crore allowed by OERC.
Hence the impact of up-valuation on distribution tariff has been estimated to be only
about 2.5 per cent. Further, it must be emphasised that it is not the up-valuation
exercise per-se that resulted in GRIDCO's cash crunch, the cause is rather the
‘adjustment’ of the totality of its receivables from the State Government (about Rs
340 crore) right from the inception.
CENTRAL ELECTRICITY SUPPLY COMPANY OF ORISSA LIMITED
While AES was acquiring CESCO, it was assured that GRIDCO would allow CESCO
cash accommodation up to Rs 174 crore. This amount, along with interest, was to be
repaid after 1 September 2002. There was a dispute between M/s AES and the State
Government over financing the required working capital over and above this amount.
AES provided Letter of Comfort to GRIDCO promising assistance to the CESCO
management in raising funds for working capital, which never happened. GRIDCO
took CESCO to court for violation of escrow arrangements as, instead of paying fully
for the bulk supply bill, CESCO was diverting part of the money for payment of
salaries. OERC intervened and directed CESCO to do its job of distribution properly.
In July 2001, AES sought GRIDCO's permission to sell its stake in CESCO to a third
party or to GRIDCO. However, this was against the shareholders’ agreement, which
provided for a lock-in-period of five years ending on 31 March 2004. CESCO's overdues
to GRIDCO have reached Rs 577 crore including the initial cash accommodation
of Rs 174 crore. AES management abandoned its responsibility from CESCO and
disappeared. OERC appointed an Administrator to run CESCO. Similar arrangement
continues till date. OERC is trying to induct a new management and is hopeful of
succeeding.
CESCO’s peak load is of the order of 676.22 MW. There is no power shortage.
Therefore, no load shedding is resorted to. Energy requirement is around 4000 MU on
an average per year. There were 20 cases of power failure in 2004-05 with an average
restoration time of 12 hours. Average number of interruptions per month was five.
There were 182 cases of distribution transformer failure with an average restoration
time of four hours in the urban areas and 24 hours in the rural areas.
Distribution loss was of the order of 41.49 per cent in 2004-05. The progress of
metering till the end of 2004-05 was as under:
• 100 per cent in respect of industrial consumers and commercial HT consumers;
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