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

Synopsis of State Reports (Vol.-IV)
Study on `Impact of Restructuring of SEBs’
• Billing to ghost consumers and bogus receivables, a legacy from OSEB
days.
• Excessive manpower and inadequately qualified staff.
• Withdrawal of subsidy support of Rs 250 crore per annum, without
transition management, beyond 1 April 1996, unlike in the case of Delhi.
• Non-payment of dues by Government departments/PSUs – outstanding
amount of more than Rs 170 crore.
• Delay in receipt of World Bank funds aggregating Rs 326 crore – led to
non-achievement of desired results for reduction in technical losses.
• Delay in receipt of funds under APDRP for Capex.
• Non-existence of special courts as envisaged in the EA, 2003.
• No retail tariff hike for the last six years, which resulted in absorbing
inflation and other rise in costs of DISCOMs. There has always been a
paucity of funds for O&M expenditure of DISCOMs.
Concern and Issues of Privatisation
i) The shareholders’ agreement between the M/s BSES Limited (now
Reliance Energy Limited) and GRIDCO has expired in March 2004. In
spite of persistent reminders by GRIDCO and the State Government,
Reliance Energy Limited has not come forward to extend the
shareholders’ agreement beyond March 2004. One of the clauses in the
shareholder’s agreement provided that the investor should endeavour to
obtain further finances to meet the financial requirements of the
DISCOMs. Due to non-signing of the shareholders’ agreement, there is no
obligation on the part of the major shareholder, namely Reliance Energy
Limited, to bring in additional finance to support the DISCOMs under its
management.
ii) The repair and maintenance activities of the DISCOMs leave much to be
desired. Although the Regulatory Commission allows 5.4 per cent of the
gross fixed assets (at the beginning of the year) to be recovered through
tariff, towards O&M expenses, the DISCOMs did not spend the required
sum under O&M. This has resulted in non-maintenance of lines and substations.
This is a serious matter.
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