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

Andhra Pradesh
• Tariff for agricultural sector to be fixed at not less than 50 paise per unit
(kWh) to start with and gradually to be brought up to 50 per cent of the
average cost of supply.
2.2.3 Policy Statement on Reforms
The Government of Andhra Pradesh, duly recognising the need for reforms in
the power sector, issued a policy statement in April 1997 clearly stating the
objectives of the reforms and the strategy to be followed in implementing them.
Restructuring the APSEB, establishment of an independent SERC and tariff
reforms were part of this strategy.
The restructuring contemplated in the policy statement was as indicated below:
“Restructuring of the APSEB, by way of restructuring the vertically integrated
Electricity Board into commercially viable functional entities for generation,
transmission and distribution. The transmission function will be handled by the
APSEB, which itself would be converted into a corporate body under the
Indian Companies Act, 1956 with the State Government as the sole equity
holder. The generating stations of the APSEB would also be constituted into a
separate generating company. The power distribution system in the State shall
be separated into distinct contiguous areas, each of which would be
administered by a separate DISCOM. Each DISCOM would be sustainable
both technically and financially on an autonomous basis. In the first instance,
all such DISCOMs would function as wholly-owned subsidiaries of the
transmission company. Based on further technical studies, steps would be taken
to promote private sector participation in distribution through setting up of
appropriate mechanisms like joint ventures, etc.”
It is clear from the above that the State Government intended to promote
private sector participation in the distribution business.
2.2.4 Performance of APSEB
APSEB was one of the largest and most efficiently run power Utilities in the
country. Since the formation of the Board in 1959, the State witnessed
phenomenal growth in the power sector. The figures given below bring out the
tremendous achievements made by APSEB during its existence of about four
decades:
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