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

National Report (Vol.-II)
Study on ‘Impact of Restructuring of SEBs’
assistance should be provided without insisting on State Government’s
guarantee; but on requirement of mortgaging the assets to be created with such
financial assistance.
6.10.3 Moreover, similar assistance must also be made available to the States, where
privatised Utilities are in position, from Central funds earmarked under
APDRP, RGGVY, etc, without any discrimination. This is being recommended
because such assistance would directly benefit the consumers and would be in
the nature of a subvention to the Utilities and do not attract any returns;
eventually this subvention goes to the consumers by way of lower tariff.
6.11 Reconstitution of the Board of Directors
6.11.2 In order to professionalise the board of directors, it is recommended that at
least 50 per cent of the directors should be independent directors, drawn from a
panel of experts with experience in the disciplines of management, human
resources development, power technology, finance, commerce, etc. It should
also be ensured that adequate number of functional directors representing major
disciplines of technical, finance and human resources management are inducted
into the boards of all Utilities. Further, no political personnel or political
decision-makers including the Ministers of the State Government should hold
any position on the boards of the restructured companies.
6.12 Memoranda of Agreements
6.12.1 The instrument of Memorandum of Agreement (MOA) with firm, specified
annual performance targets for achievements, as existing in the case of Central
Public Sector Undertakings (CPSUs), should be institutionalised between the
restructured companies and the Departments of Power/Energy of the respective
State Governments. The MOA should also include the commitments and
obligations of the State Governments vis-à-vis the Utilities to facilitate the
fulfillment of the targeted level of performance.
6.13 Better Management Practices
6.13.7 In order to empower the restructured companies with autonomy, the State
Governments should allow the Utilities to function without any restrictions and
management controls, as would apply to corporate bodies under the Companies
Act. Further, the management cadres of the new companies must be
strengthened by inducting competent and experienced middle and top level
functionaries who will be able to work more independently and professionally.
The CMDs/managing directors and functional directors of the companies
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