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

Haryana
The need for comprehensive reforms was felt as the Haryana State Electricity Board
(HSEB) found it increasingly difficult to meet the demand for power, which witnessed
a peak shortage of 11 per cent and energy deficit of around 25 per cent in 1997. No
generation capacity had been added within Haryana till 1990 and the State was
increasingly dependent on power imported from outside sources.
Due to poor transmission and sub-transmission system in the State, supply from
outside sources in the northern grid could not be fully availed. The situation further
worsened due to lack of adequate funds for expansion of generation, transmission and
distribution capacities and the State’s inability to control the cumulative effect of
inefficiencies and mounting commercial losses. By March, 1998 the accumulated
financial losses had reached Rs 16,079 million and continued to grow on account of
non-compensatory tariffs, high energy losses and poor revenue collection. The
financial health of HSEB did not improve despite huge support of Rs 42,613 million
from the State Government during the five years preceding the reforms.
Chronology of Restructuring
HSEB was carved out from PSEB in 1967. Haryana Electricity Reforms Act, 1997
was enacted in August 1998. HSEB was restructured into Haryana Power Generation
Corporation Ltd (HPGCL) and Haryana Vidyut Prasaran Nigam Ltd (HVPNL).
Subsequently, through the Second Transfer Scheme (notified in July 1999), two
distribution companies viz: (i) Uttar Haryana Bijli Vitran Nigam Ltd (UHBVNL) and
(ii) Dakhshin Haryana Bijli Vitaran Nigam Ltd (DHBVNL) were incorporated by
transferring distribution assets, liabilities and personnel of HVPNL to them.
THE REFORM EXPECTATIONS
When the reforms were initiated in the sector, it was expected that these would lead to
conditions for self-sustenance and would be able to attract private investments and
participation, improve availability, quality and reliability of power at reasonable prices
to the consumers in the State. The reforms in the State have been in place for nearly
seven years now. The direction, which the reforms have taken, and the efforts made in
the reform process during the last seven years reflect a mixed picture of the entire
reform process as elaborated in the subsequent sections of this Report.
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