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

4.2.4 Structural Issues
Synopsis of State Reports (Vol.-IV)
Study on `Impact of Restructuring of SEBs’
The State support for the reform process has been positive. But to take forward
the reform process further, some structural issues and the role of the MPSEB
for cash management of Utilities would need to be addressed. Considering the
changing market scenario of ‘Open Access’, there is need for an intra-State
ABT and competitive power procurement. For this, the Utilities would require
more functional as well as financial autonomy.
FRP and CFM
The State Government’s commitment for the reform is demonstrated by the
FRP, which stipulates the total transition cost involved for the power sector in
the State. For the DISCOMs, the State Government is providing financial
support to the tune of Rs 6,881 crore. The role of the MPSEB has some
advantages but, in actual practice, it amounts to concentration of decisionmaking
with MPSEB in several areas, which are normally in the jurisdiction of
the DISCOMs. Since MPSEB is not a licensee now and, therefore, not
answerable to MPERC, there is a likelihood of conflict with the objectives and
spirit of the EA, 2003. The objectives of the CFM and the FRP could be
achieved through a holistic approach, which guarantees prior consultation with
the MPERC and control and responsibilities on the DISCOMs for
implementation of the goals and targets of the FRP.
The FRP has been revised to cover the period from 2006-07 to 2012-13. The
FRP provides for the reduction of AT&C losses from 50 per cent to 32.5 per
cent in a seven years period, i.e., around 2 per cent on a yearly basis, which
appears to be low. It also provides for financial support to the Utilities for the
revenue foregone by way of concessional tariffs and also for meeting the
operational deficit of the Utilities.
Key Areas for Support by State Government
Functional autonomy for the restructured Utilities may have to be defined
within the framework of the reform model adopted by the State Government to
make the Utilities more accountable. Equally important is the effectiveness of
the Commission by giving it support for financial autonomy and capacity
building.
45