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

Orissa
REFORMS PROCESS IN TWO STATES – COMPARISON BETWEEN
DELHI AND ORISSA
Delhi could avoid the pitfalls as it had taken note of the Orissa experience.
Government stopped supporting the power sector as soon privatisation took place in
Orissa. In Delhi, the Government remained committed to the success of reforms with
a five year committed support of Rs 3,450 crore.
In Orissa, the loss levels were not realistically assessed. In Delhi, the concept of
AT&C losses reduced the scope of base line data errors. Realistic loss figures, duly
approved by the Commission, provided comfort to the investors.
In Orissa, there was absolutely no support from the commercial lenders. The promoter
companies namely M/s AES and Reliance Energy Ltd refused to pump in even the
working capital into the sector. In the case of Delhi, there is fund assurance under
APDRP and from the PFC. The bidding structure assures guaranteed returns, which
facilitates commercial loan availability.
In Delhi, the non-serviceable liabilities were retained in the holding company. Only
the serviceable liabilities were transferred to the DISCOMs.
In Orissa, the receivables were very high. In the absence of audited data, bad debts
were not allowed by the Commission. In Delhi, the past receivables were to the
account of the holding company. In Delhi, DISCOMs were given an incentive of 20
per cent for collecting the past dues. (In Orissa it is 50 per cent but DISCOMs have
not shown desired interest in collecting the past dues.)
There was no Regulatory involvement in Orissa, whereas in Delhi there was full
involvement leading to greater practical orientation in decision-making.
There have been problems with audited accounts not being available both for Orissa
as well as Delhi. But in Delhi, clear balance sheets were assured to the DISCOMs.
The business valuation approach mitigated the risk of asset valuation.
In Orissa, the assets were revalued at high levels prior to the bidding process. This
created serious problems, which the Kanungo Committee report sought to remedy.
The State Government agreed to keep the revaluation in abeyance till 2005-06.
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