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

Synopsis of State Reports (Vol.-IV)
Study on `Impact of Restructuring of SEBs’
iii) In the Business Plan, the Regulatory Commission has fixed a benchmark
for the DISCOMs for reduction of distribution losses by 3 per cent every
year till 2007-08. In the event of failure by the DISCOMs to achieve this
loss reduction, the investor should come forward to provide necessary
fallback arrangement/arrange necessary funds to pay to GRIDCO towards
BST dues and other loan repayments. This has not happened because the
investor has been found unwilling to invest any fresh capital in the sector.
As on 31 March 2005, the liabilities of the DISCOMs towards GRIDCO
were as under:
Amount On Account of Remarks
Rs 1,291.99 crore Outstanding BST dues
Rs 1,535.63 crore
Loan repayment of
PFC, REC, etc.
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These are related to
commitments associated with
the distribution assets
transferred to the DISCOMs
iv) GRIDCO, being a commercial entity, is unable to find ways and means
for making payments to suppliers like NTPC, OHPC, etc., and repayment
of loans taken from financial institutions. The investor should have
arranged funds to ensure liquidation of arrear liabilities of the DISCOMs
to GRIDCO as they are unable to repay the dues of GRIDCO from their
own resources.
v) During the super cyclone in 1999, there has been substantial damage to
the distribution system in the State, especially in the coastal areas. There
was inordinate delay in restoring the distribution system in the affected
villages. Even today, electricity has not yet been restored in 75 such
villages of the State. This has led to adverse criticism from all concerned
about the working of the DISCOMs as well as the reform process.
Unfortunately, no funds were sanctioned from the Calamities Relief Fund,
although the assets belonged to the State Government (assets were not
transferred to private companies and only transfer of shares had taken
place).
vi) There is reduction of only 10.16 per cent in AT&C losses between 2000-
01 and 2004-05 by the DISCOMs, which is not quite satisfactory.
vii) The entire funding of distribution business has been financed through
default in repayment of loans to GRIDCO. In the process, GRIDCO’s