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

Synopsis of State Reports (Vol.-IV)
Study on `Impact of Restructuring of SEBs’
• Providing equitable access to basic and reasonably priced electricity service
to all by year 2010;
• Meeting the entire electricity requirements of commercial and industrial
sectors so as to accelerate economic growth;
• Promotion of environment-friendly energy usage;
• Accelerated reform process;
• Disinvestment of the shares in KPCL; and
• Maximum autonomy to the DISCOMs to manage their business along
commercial lines, and freedom to frame their own service conditions and
recruitment procedures without jeopardising the interests of the transferred
employees.
3.7 INDEPENDENT POWER PRODUCERS POLICY
An IPP Policy was also issued in 2001. The policy envisaged additional
capacity addition of 3,500 to 4,000 MW, strengthening of the transmission
network correspondingly at a cost of Rs 13,500 crore, and reduction of T&D
losses to 14 per cent by 2010. The policy stated that Government of Karnataka
would not provide escrow cover or other forms of guarantees to IPPs in future;
that all future thermal capacity additions should come from private generators,
and that encouragement would be given to provide about 10 per cent of the
total installed capacity from non-conventional energy sources. The policy
sought to prioritise the projects on transparent considerations such as least tariff
criteria, synchronisation with evacuation arrangements, etc.
3.8 FINANCIAL DEVELOPMENT PLAN
The consultants appointed by Government of Karnataka to frame the Financial
Development Plan (FDP) proposed the instrument of ‘Distribution Margin’
(DM). This strategy inter-alia had the following elements:
• Government of Karnataka was to share substantial risks, mainly related to
regulatory and governmental discretionary issues with the successful
bidders for the DISCOMs during a transition period of five years; and
• Investors themselves would mainly bear the risks of operating costs,
capex, etc., and pay penalty for their own unsatisfactory performance,
which included billing and collection.
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