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

Synopsis of State Reports (Vol.-IV)
Study on `Impact of Restructuring of SEBs’
The Assam Electricity Bill to provide for restructuring of the power sector was
passed by the Assam Legislature but was not enacted since the EA, 2003 came
into effect in June 2003.
The Government of Assam had sought the assistance of ADB to address the
major issues of the power sector. In the wake of the Policy for Reform, issued
in January 2003, a team from the ADB held discussions in August/September
2003 for the loan appraisal of Assam Power Sector Development Programme
and recommended a loan of US$ 250 million with a component of $150 million
for restructuring and US$ 100 million for project component of transmission
and distribution system strengthening and also ‘technical assistance’ of $1.5
million for the cost of consultants. ADB loan was sanctioned on 11 December
2003 and the first tranche of US$ 90 million was released on 12 December
2003 and the second tranche of US$ 60 million, on 28 June 2005.
On 30 September 2003, the Government of Assam approved the new power
sector structure of the formation of the following five companies:
(a) Assam Power Generation Corporation Limited (APGCL)
(b) Assam Electricity Grid Corporation Limited (AEGCL)
(c) Upper Assam Electricity Distribution Corporation Limited (UAEDCL)
(d) Lower Assam Electricity Distribution Corporation Limited (LAEDCL)
(e) Central Assam Electricity Distribution Corporation Limited (CAEDCL).
These companies were incorporated under the Companies Act, 1956 on 23
October 2003. The Financial Reconstruction Plan (FRP) Order was issued by
the Government of Assam on 28 October 2003, indicating how the crossliabilities
between the Government of Assam and ASEB would be settled. An
MOU was signed between the Government of Assam and ASEB in November
2003. The financial adjustments were as follows:
• Amounts owed to ASEB by Government of Assam: Rs 5,389 crore
• Amounts owed by ASEB to Government of Assam: Rs 4,560 crore
The Government of Assam agreed to provide for the cash deficit of the
successor companies in the transition period of the order of Rs 338 crore,
including Rs 103 crore for 2003-04. A key event in the restructuring process
was the issue of Assam Electricity Reforms First Transfer Scheme, 2004 on 10
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