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

Haryana
LESSONS FROM THE RESTRUCTURING PROCESS
STATE GOVERNMENT AND GOVERNANCE ISSUES
The power sector reforms commenced in 1998 with a clear policy mission, which,
inter-alia, aimed at creating a vibrant environment for attracting investments in
generation, etc., in the State. The reform model was supported with substantial
financial assistance from the multi-lateral agencies. The roadmap, which was prepared
for the sector reforms, underwent a change with the change of Governments in the
State. This not only caused a setback to the prospects of new/private investments in
the sector and also deprived the State of substantial aid, which was promised by the
International funding agencies.
The continued commitment of the Government, as envisaged in the Haryana Reforms
Act of 1997, did not come as was required to carry through the reforms. However, the
State has maintained its commitment for implementing the reforms.
Even though the power sector reforms in the state were initiated seven years ago,
organisational autonomy in terms of administrative, technical and commercial
decision-making has not been fully transferred by the State Government. One of the
objectives of restructuring is that the restructured entities shall perform their functions
in an efficient and autonomous fashion. All the restructured Utilities in the State have
a common Chairman. While this arrangement may provide coordination between the
Utilities, it also tends to dilute attention on specific issues and priorities of the
individual utility. Added to this is the frequent transfer of the MDs, which affects
continuity and accountability. The powers of the Managing Director and the Board of
Directors and their accountability are not well defined in the existing organisational
structure.
The finances of Government of Haryana are marked by very high self-reliance to fund
its revenue expenditure (85 per cent in 2004-05). High levels of subsidies to
agricultural consumers could affect the transfer of resources to meet the needs of the
social sector. The Government’s inability in the future to serve the subsidy may
seriously jeopardise the commercial viability in the sector unless the agricultural
pumpset tariffs are gradually increased in a phased manner.
The Government approach to bail out the Utilities by taking over the arrears of rural
domestic and agricultural consumers may find some justification but such ad-hoc
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