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

5.6 OERC and the DISCOMs
Synopsis of State Reports (Vol.-IV)
Study on `Impact of Restructuring of SEBs’
Orissa has four DISCOMs. CESCO, abandoned by the AES, is going to be
handed over to a new investor company. OERC is on the job of locating the
suitable investor.
As regards the other three DISCOMs, namely NESCO, WESCO and
SOUTHCO, which are with Reliance Energy Limited, OERC has issued show
cause notices to them as to why their distribution license should not be
suspended. This is because of the refusal of the promoter company, Reliance
Energy Limited, to bring in investments required for system improvement in
distribution. The three DISCOMs have also been resisting renewing the
shareholders’ agreement. It is understood that the DISCOMs have gone in
appeal to the Appellate Tribunal in Delhi. Thus, the entire distribution business
in Orissa is mired in uncertainty.
All the DISCOMs have shown considerable improvement in their functioning.
Some progress has been made in metering, billing and collection. They are
paying the BST bill of GRIDCO and are also able to pay salaries to their
employees. But they are yet to clear Rs 1,000 crore of loans and about Rs 1,200
crore of old electricity dues.
There has been no tariff revision during the last five years. Only recently, BST
has been revised upwards by 15 per cent but no increase has been allowed by
the OERC in retail tariff. The OERC apparently thinks that the DISCOMs
should collect old arrears to the tune of Rs 2,000 crore (one per cent reduction
of T&D loss indicates additional collection of Rs 43 crore) and also reduce the
losses. It is interesting to note that the State Government has not opposed
revision of tariff. If the tariff is not immediately revised, all the four DISCOMs
will become terminally sick.
A special collection drive needs to be undertaken throughout the State. Onetime
settlement through Bijli Adalats could be taken up. Penal dues could be
written off for those who pay their arrears at one go.
Although T&D losses have come down from more than 50 per cent to around
40 per cent, which is much above the permissible limit. T&D losses can be
brought down to the prescribed level only if fresh investments are made by the
DISCOMs.
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