The Hindu : ADB loan for power sector likely by Nov.

Online edition of India's National Newspaper
Sunday, Feb 09, 2003

Southern States

Southern States - Kerala

ADB loan for power sector likely by Nov.

By Our Special Correspondent

THIRUVANANTHAPURAM FEB. 8. The Electricity Minister, Kadavoor Sivadasan, said here today that the Government might be getting the ADB loan for power sector development and restructuring by November this year.

Addressing a press conference, the Minister said this loan was separate from the one received by the Government in December last.

Mr. Sivadasan said officials had been told to negotiate the loan only from within the conditions accepted by the LDF Government. The final decision would be that of the Cabinet.

The Minister said no decision had been taken to increase power tariffs during discussions between the ADB consultants (Crisil and Nexant) and officials here on Friday.

Crisil had been asked to prepare a tariff petition for submission to the Electricity Regulatory Authority. Only the Authority had powers to decide on a tariff revision, the Minister said.

The Principal Secretary (Power), Lizzie Jacob, and chairman of the State Electricity Board, T.M. Manoharan, who also were present, said that rate per se had not come up for discussion at the meeting. The ADB consultants had said that the tariffs should be progressively increased to reflect the cost of energy. They had said the Government should give financial support for power subsidies. However, they had not said that cross subsidies should be eliminated.

The ADB consultants had specified that the average cost of energy should be brought down. The costs should be brought down by reducing transmission and distribution losses, staff costs and cost of debts.

The officials said that they had suggested that corporatisation should be delayed and that the profit centres under the Board should be allowed to function for more than a year so that their effectiveness could be ascertained.

The Minister denied that the formation of profit centres was necessarily a prelude to corporatisation. Asked whether he was not delaying corporatisation, the Minister said it was the LDF Government which had delayed revision of tariff that was to be effected in 1999.

The profit centres had not yet been given full functional independence after apportioning assets and liabilities. Once they were given independence, the Board would be taking only policy decisions.

He said that what had been discussed at the meeting on Friday was the draft final report of the ADB consultants on restructuring of the Board and other aspects. The report would be finalised taking the suggestions of the Board and Government into account.

He said there was no justification by the agitation launched by the DYFI against the meeting. The CPI(M) had stated that it was not opposed to the loan but only the conditions. The conditions under discussion were not different from the ones accepted by the Finance Minister of the LDF Government, T. Sivadasa Menon.

Mr. Menon had agreed to private investment in the power sector, appointment of State Electricity Regulation Commission, domestic tariff revision from June 1999, division of the Board into three profit centres and minimisation of tariff subsidies. He had also agreed to setting of the tariffs to cover all operating costs, depreciation and interest.

Meenmutty project: The Minister announced that the senior Congress leader, K. Karunakaran, would inaugurate the work on the Lower Meenmutty Small Hydroelectric Power Project on Monday. This would be the first project of the Board in the Thiruvananthapuram district.

The project, with installed capacity of 3.5 MW, would yield 7.38 million units of electricity a year. A six-metre dam was being constructed for the project. The work was expected to be completed in 24 months.

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