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DVC mulls contracting select operations

Indrani Dutta

CALCUTTA, April 22

DAMODAR Valley Corporation (DVC) is weighing the pros and cons of contracting out some of its activity, such as soil conservation, afforestation and ecological improvement.

Informed sources told Business Line that this was part of DVC's plans to contract out some activity to the private sector. ``DVC is keen to contract out with the existing infrastructure and manpower, and an agreement regarding maintenance of quality stan dards,'' they said.

Alongside, DVC proposes a review of its entire gamut of operations (barring the key area of flood control) so that its commercial viability is enhanced in a rapidly-changing environment. It has engaged the Administrative Staff College of India (ASCI), Hy derabad, to study these proposals and prepare a report.

The company is also keen to enter the area of coal mining and washing, treating it as a separate profit centre or a strategic business unit. It has a captive opencast mine at Bermo in Bihar.

Pointing out that it was becoming increasingly difficult for DVC to ``give adequate management attention and priority'' to soil conservation and afforestation in the liberalised era, the sources said there was a risk that such activity might be neglected .

Through sustained effort, DVC has been able to check soil erosion by nearly 50 per cent in the area around its dams (three in Bihar and one in West Bengal). With increased land availability, cropping intensity has increased by nearly 100 per cent, as has the net income of farmers.

``It is important that this pace of development which has improved the lot of the local population be maintained,'' the sources said while reasoning out the need to assign such jobs to contractors.

DVC was set up in July 1948 through an Act. Modelled on the Tenesse Valley Authority of the US, it was independent India's first multipurpose river valley project.

Its initial charter of objectives included flood control and irrigation, generation and distribution of electricity, supplying water for domestic and industrial use, soil conservation, afforestation and socio-economic uplift of the region.

However over the years, its emphasis has increasingly been on power generation, which is why it is known more as a power utility today.

DVC has had to contend with a curtailment of its original plan for dam construction. The original proposal of building eight dams have all but been abandoned. It has only four dams in its system now.

Being a corporation under a specific Act, it has over the years almost acquired the bureaucratic characteristics of a Government department, although it functions as a commercial entity generating surplus to finance its own growth and fulfil social objec tives.

The need of the hour is to reconstitute it as a purely commercial enterprise. ``It was with this aim that the DVC board recently passed the resolution appointing ASCI to suggest restructuring,'' the sources said.