Govt. keen on vigorous power sector reforms

By Our Special Correspondent

CHENNAI, NOV. 9. The Union Government has decided to organise 2,000 road shows on power sector reforms across districts to take its message to the people at large.

These events will be conducted in a language that the people understand, the Union Minister for Power, Mr. Suresh Prabhu, said here today.

Inaugurating a conference on power sector reform with focus on the role to be played by chartered accountants, organised by the Power Finance Corporation and the Institute of Chartered Accountants of India (ICAI), Mr. Prabhu said Indian industry, agriculture and services were all facing competition from the global market and were impacted by developments round the globe. However, the power sector was one area which was entirely in the control of the nation and at the same time offered scope for improvement in efficiency, which would in turn help improve the competitiveness of industry, agriculture and services.

Referring to the Electricity Bill 2001 now before Parliament, Mr. Prabhu said unless the weaknesses in the power sector, especially in the distribution segment, were ``fixed'', additions to generation capacity would only mean greater losses by way of more thefts and irrational tariffs.

The Government had given up the ``short-cut'' of asking Central public sector enterprises to grant letters of credit to State electricity boards (SEBs) which owed them more than Rs. 40,000 crores. It was now introducing a mechanism, whereby the State governments would be allowed to ``take over'' the past debts of the SEBs and issue bonds to the boards, so that the SEBs' balance-sheet would become attractive to investors. Andhra Pradesh had already signed a tripartite agreement to implement this plan.

In future, all payments to Central PSEs such as the National Thermal Power Corporation, Coal India/subsidiaries and Railways would have to be made within a stipulated period from the time of incurring liability and in case of defaults, the Reserve Bank of India would ``make deduction at source'' (from funds due to the defaulting States).

Mr. Prabhu said his Ministry had come out with a ``Blueprint for power sector development'' and had already started work on implementation of projects to be taken up during the Tenth Plan, besides assisting States to install management information systems (MIS) and use information technology (IT) for monitoring power distribution. The national grid being built by the Centre would help the southern States in particular in meeting power shortages with supply from eastern and north-eastern States, which had abundant coal and water resources for power generation.

Mr. Ajay Shankar, Joint Secretary, Ministry of Power, said the past practice of cross-subsidisation was leading to a situation whereby ``dynamic'' and industrially advanced States were facing a fall in demand for (grid) power from the industry sector (because of high tariff) and industries preferred captive power. The Electricity Bill 2001 respected the autonomy of States and gave them enough flexibility in implementing reforms, he said.

Mr. Ashok Chandak, Vice-President, ICAI, and other senior members of the institute and its research committee said it would finalise the disclosure and prudential norms for the power sector shortly. They indicated that disclosures relevant to investors would have to remain at the same stringent level as for any other economic activity and segregated from other disclosures for purposes like price fixing by the regulator.

Ms. Jayawanti Ben Mehta, Union Minister of State for Power, said if the economy was to grow by 8 per cent, the power sector would need to grow at 9 to 10 per cent, given the fact that per capita power consumption in India was as low as 300 kWh compared to 800 kWh in China.

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