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

State Reports (Vol.-III)
Study on `Impact of Restructuring of SEBs’
(ii) The repair and maintenance activities undertaken by the DISCOMs leave much
to be desired. Although the Regulatory Commission allows 5.4 per cent of the
gross fixed assets (at the beginning of the year) to be recovered through tariff,
towards R&M expenses, the distribution companies do not spend the required
sum. This has resulted in inadequate maintenance of lines and substations.
(iii) In the business plan, the Regulatory Commission has fixed a benchmark for
reduction of distribution loss by three per cent each year till 2007-08. The
DISCOMs are required to achieve this loss reduction. In the event of failure by
the DISCOMs to achieve this loss reduction, the investor should come forward to
provide necessary fall-back arrangement/arrange necessary funds to pay to
GRIDCO towards BST dues and other loan repayments. This has not happened
because the investor is unwilling to invest any fresh capital in the sector.
(iv) As on 31 March 2005, the liabilities of the DISCOMs were as follows:
• Rs 1,291.99 crore to GRIDCO as outstanding BST dues; and
• Rs 1,535.63 crore towards loan repayment of PFC/REC and World Bank
relating to distribution assets transferred to the distribution companies.
GRIDCO being a commercial entity is unable to find ways and means for
payment to the generating companies like NTPC, OHPC and repayment of its
loan to financial institutions. The investor should have arranged funds to ensure
liquidation of arrear liabilities of the DISCOMs to GRIDCO, as the DISCOMs
are unable to repay the dues to GRIDCO from their own income.
(v) During the super cyclone in 1999 there was substantial damage to the
distribution system in the State, specifically in the coastal areas. There was
inordinate delay in rehabilitation of the distribution system in the affected
villages. Even today, there are 75 villages in the coastal areas of the State, where
electricity distribution network has not yet been restored. This has created
adverse criticism from all concerned about the working of DISCOMs as well as
the reform process.
(Bulk of the arrear dues in these areas needs to be written off.)
(vi) There is reduction of only 10.16 per cent in AT&C losses during 2000-01 to
2004-05 by the distribution companies, which is not up to the mark.
(vii) The entire funding of distribution business has been financed through default in
payment of monthly BST bills/instalment of interest and principal payable to
GRIDCO. In the process, GRIDCO’s financial position has deteriorated
substantially.
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