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

Synopsis of State Reports (Vol.-IV)
Study on `Impact of Restructuring of SEBs’
Restructuring has been done on the basis of a provisional Transfer Scheme
wherein the valuation of assets is based on book value of assets. Government of
Maharashtra’s Resolution of January 2005, states that the valuation of the
assets of MSEB to be transferred to the companies should finally be based on
revenue potential of the assets transferred. The assets would be revalued within
a period of one year and this revaluation would be effective retrospectively
from the date of transfer. The financial restructuring, after revaluation, was to
be determined in such a manner that the consumers would face minimum
increase in tariff.
10.7 LESSONS LEARNT
It is observed that as early as in 2002 (when the White Paper was published),
the State Government was convinced about the need to reform the sector. This
was much earlier to the promulgation of the EA, 2003. In spite of this, the
restructuring of MSEB could only be done much later i.e., before the expiry of
the extended period set by the Government of India. Also, it is noted that till
the date of restructuring, the attitude of the staff was not supportive. These
aspects reveal a lack of political will to follow the widely debated and accepted
reform agenda and also failure in communicating with the staff and winning
their support for the restructuring exercise.
As a consequence, at the time of actual restructuring, neither the Government
of Maharashtra was in a position to set any targets and deadlines for
performance improvements by the restructured entities nor was the long-term
financial support by the Government of Maharashtra to the new entities
defined. In the absence of such a long-term plan, the sector was left to face the
uncertainties of policies that would be adopted by Government of Maharashtra
in future. This period of two years of uncertainty led to further deterioration of
the sector, as no major investments were forthcoming for system
improvements.
For the reforms to succeed, the wholehearted support of the Government and
the employees is very important.
10.8 UNIQUE FEATURE OF THE REFORM PROCESS
A unique feature of the reform process was the very early realisation of the
need to reform the sector. Government of Maharashtra had taken steps to set up
an Energy Review Committee to review the power situation in the State and
109