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

Synopsis of State Reports (Vol.-IV)
Study on `Impact of Restructuring of SEBs’
the first, relating to the cash management during the transition period and the
second, to act as principal employer till the staff gets allocated amongst the
Utilities. Although, MPSEB will be the principal employer, full powers relating
to punishments, dismissals, etc., have been vested with the CMDs of the
respective Utilities. The State Government officials feel that this arrangement
was also necessary because of the dispute over the assets and liabilities
pertaining to the erstwhile Board of the undivided Madhya Pradesh.
4.1.5 Formation of TRADECo
Government of MP notified the “Madhya Pradesh Electricity Reforms Transfer
Scheme Rules, 2006” on 3 June 2006. Under these rules a new company called
MP Power Trading Company (TRADECO) came into existence. The power
purchase function, which was being performed by MPSEB, now stands
transferred to TRADECO.
4.1.6 Cash Flow Mechanism of MPSEB
The Cash Flow Mechanism (CFM) adopted by MPSEB has been defined in the
“Madhya Pradesh Electricity Reforms Transfer Scheme Rules, 2006”. The
salient features of the scheme are:
i) All the six restructured companies, including TRADECO, shall issue
Powers of Attorney or authorisation in favour of MPSEB, inter-alia,
authorising it to “own, collect and distribute” cash on behalf of each of the
companies;
ii) All the cash collected by the DISCOMs, through Regional Accounting
Offices (RAOs), shall be transferred to MPSEB account as per the
existing arrangement;
iii) All letter of credits, escrow comforts and working capital shall continue to
be maintained by MPSEB on behalf of the companies as MPSEB has first
charge over entire revenue of DISCOMs from sale of power, subject to
escrow agreements, as per the existing arrangements, duly supported by
authorisations from the companies;
iv) MPSEB shall allocate cash among companies, based on a predetermined
priority, for payment of expenses as detailed below:
(a) Statutory payments including those arising out of various Court
orders;
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