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

Synopsis of State Reports (Vol.-IV)
Study on `Impact of Restructuring of SEBs’
• Installation of high quality meters;
• Installation of capacitors both in substations and in consumer premises to
improve the system power factor;
• Close monitoring of billing, collection and disconnections;
• High level of PLF of thermal power stations by better maintenance and
management; and
• Efficient use of the hydel storage to mitigate the peak-hour shortages.
Reform Measures
11.8 Despite many achievements, TNEB has been lagging behind in the reform
process. Except for the setting up of the SERC and issue of tariff orders by it, not
much progress is seen in the State. The tariff revision of 2003 has also been put
back by the Government on account of drought; but the Government has not
been compensating TNEB fully. Even though SERC is functioning and issuing
tariff orders, the Government could modify the tariff merely with a promise of
compensation. TNEB, being fully owned by Government, will find it difficult to
collect the dues from the Government. Power sector reform can succeed only if
all players are convinced of the need for such a reform and cooperate with one
another in achieving results. This is a national level issue and a consensus on this
is vital. The decision to reduce the cross-subsidy over a fixed timeframe is a case
in point. Perhaps, it is time a legal solution is found.
It appears from the reply given by the Board that the State Government is no
longer keen on restructuring of TNEB. Instead of restructuring the Board, it is
considering the profit centre concept, as recommended by its consultant M/s
CRISIL Infrastructure Advisory, Mumbai. It is possible that the Board had taken
this decision because of the resistance from the Employees Unions. However, the
State Government had requested Ministry of Power to grant an extension for
restructuring of TNEB till December 2006, which was granted.
Way Forward
11.9 It appears that the thinking of the Board and its Employees Unions is that
efficiency gains of reform have already been achieved by the Board and hence
there is no need for restructuring. However, it must be remembered that further
efficiency gains will be possible only by restructuring. Restructuring, offers
tremendous scope for further efficiency gains and improvements. With smaller
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