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

State Reports (Vol.-III)
Study on `Impact of Restructuring of SEBs’
(i) The power utilities were to establish Letter of Credit for 105 per cent value of the
average monthly billing during the last 12 months;
(ii) The power utilities were to make full payment of the energy bills to the CPSUs
after 30 September 2001;
(iii) For establishing Letter of Credit, the CPSUs were to provide 2 per cent incentive
on the amount of the bonds; and
(iv) For making the full payment of the current dues, the CPSUs were to provide
incentive @ 6, 5, 4 and 4 per cent respectively on the amount of bonds during the
next four years. In case of default in payment, the power utilities were to be
deprived of the admissible incentives.
As per the scheme, these bonds were to be issued by the State Government and the
power utilities of the State were to do the servicing. Bonds worth Rs 2,022.29 crore
were issued by the State Utilities. Now, this liability has been assumed by the State
Government to offset the State’s dues towards the Utilities, on account of default in
payment of 2000-01 to 2002-03 and Fuel Surcharge Adjustment (FSA). As a general
practice, FSA is a pass through in the tariff and is borne by the consumers. However,
the current adjustments reflect a non-rational approach as it interferes with the
determination of tariff by the Commission. The details of the liabilities taken over by
the State Government are provided below:
Table: Details of Liabilities of HSEB Taken Over by the State Government
Particulars
(Rs crore)
Amount Committed
by the State Government
Un-paid subsidy for 2000-01 474.86
13% interest on the liability dues to un-paid subsidy for the
years 2000-01 and up to 30 September 2001
96.61
FSA up to 30 September 2002 481.16
Stamp Duty 2.00
40% Surcharge on CPSUs liabilities as a one time settlement 433.01
FSA up to March 2003 143.10
FSA upto 31 March 2005 391.55
Total 2,022.09
On the whole, the scheme of One Time Settlement (OTS) of outstanding dues was
beneficial both for the power Utilities as well as the State Government. The surcharge
amount of Rs 649.52 crore was waived off. Further, under the scheme, various
incentives to the tune of Rs 421.88 crore were also allowed to the power utilities.
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