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

Synopsis of State Reports (Vol.-IV)
Study on `Impact of Restructuring of SEBs’
In Orissa, the loss levels were not realistically assessed. In Delhi, the concept
of AT&C losses reduced the scope of base line data errors. Realistic loss
figures, duly approved by the Commission, provided comfort to the investors.
In Orissa, there was absolutely no support from the financial institutions. The
promoter companies, namely: AES and Reliance Energy Limited, refused to
pump in even the working capital. In the case of Delhi, there is fund assurance
under APDRP and from the PFC. The bidding structure assured guaranteed
returns, which facilitated commercial loan availability.
In Delhi, the non-serviceable liabilities were retained in the holding company.
Only the serviceable liabilities were transferred to the DISCOMs.
In Orissa, the receivables were very high. Unfortunately, in the absence of
audited data, the State Electricity Regulatory Commission did not allow bad
debts. In Delhi, the past receivables were to the account of the holding
company. DISCOMs were given an incentive of 20 per cent for collecting these
receivables. (In Orissa, it is 50 per cent but DISCOMs have not been able to
collect these.)
There was no regulatory involvement in Orissa, whereas in Delhi there was full
involvement, leading to greater practical orientation in decision-making.
There have been problems due to non-availability of audited accounts both in
the case of Orissa and Delhi. However, in Delhi, clear balance sheets were
assured to the DISCOMs. The business valuation approach mitigated the risk of
asset valuation.
In Orissa, the assets were revalued at high levels prior to the bidding process.
This created serious problems, which the Kanungo Committee report sought to
remedy. The State Government agreed to keep the revaluation in abeyance till
2005-06, in pursuance of the recommendations of the Kanungo Committee.
In Delhi, the assets were valued through business valuation process, based on
revenue earning potential. This ensured a sustainable level of liabilities.
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