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

CHAPTER - 5
ORISSA
5.1 BACKGROUND, OBJECTIVE AND FACTORS LEADING TO
REFORMS
5.1.1 Power Sector Scenario Prior to Reform and Restructuring:
• Weak technical/network system.
• Lack of capital.
• Very high T&D losses – between 43 and 44 per cent as against the
declared level of 32 per cent.
• Low commercial efficiency, which resulted in accumulating unrealistic
receivables on the books.
• AT&C losses – around 55 per cent.
• Manual accounting system and lack of control and checks on billing,
hardware and software.
• Unreliable power supply and lack of consumer services support. Prolonged
load shedding.
• Subsidy/grant from Government of Orissa (In 1996, this amounted to Rs
250 crore).
• The revenue gap was constantly increasing from year to year and became
unsustainable.
All this resulted in huge revenue losses to OSEB. In November 1993, a decision
was taken by the Government of Orissa to undertake a process of reform and
restructuring of the power sector in the State.
The restructuring process contemplated the following actions:
Restructuring
By reorganisation of generation, transmission and distribution
functions.
Private sector
participation
Through private sector participation in generation and distribution
activities, as it was no longer possible to fund these through the State
exchequer.
By transparent and independent Regulatory body, which would
Regulation
address the problems of the power sector, Government decided to
distance itself from the power sector except for issuing policy
directives.
Tariff By tariff reforms at bulk transmission and retail levels.