The Hindu : Winding up of RESCOs could benefit rural consumers

Online edition of India's National Newspaper
Tuesday, Jul 15, 2003

Southern States

Southern States - Andhra Pradesh-Hyderabad

Winding up of RESCOs could benefit rural consumers

By V.N. Harinath

HYDERABAD July 14. The winding up of five "loss-making'' and "inefficient'' rural electricity cooperative societies (RESCOs) in the districts of Kurnool, Cuddapah, Anantapur and Medak, ordered by the Registrar of Cooperative Societies under public enterprises reforms could well prove to be a boon to consumers in rural areas.

This is one restructuring move that consumers of power from Atmakur (Kurnool), Rayachoti (Cuddapah), Kadiri West, Kadiri East (Anantapur) and Jogipet (Medak) RESCOs are bound to be welcome, as these societies had failed to meet their energy requirements efficiently for a long time.

Now that these societies are being wound up there is hope for the consumers, as the more efficient power distribution companies (DISCOMs) would be meeting their needs, sources in the Public Enterprises Department told The Hindu.

According to sources, some of the employees of these RESCOs would find re-employment as well, as the DISCOMs have also been given the option to identify staff on the basis of their requirement and also based on the technical qualifications of the staff. Those employees not absorbed by the DISCOMs would be given VRS from out of funds to be provided by the Implementation Secretariat of the department.

D.K.Panwar, Principal Secretary, PED, who has been appointed Registrar of Cooperative Societies for the five RESCOs under reforms holds the view that the inefficiency of the societies meant a "drain of government resources.''

Studies conducted and an enquiry commissioned by the Implementation Secretariat highlighted the

``dismal'' performance of the RESCOs on several parameters like high distribution losses, high transformer failures, high number of connections without meters, poor collections and partial or no payments for power purchase bills of DISCOMs.

The five RESCOs together owe the DISCOMs Rs.42.42 crores and their liabilities add up to Rs.65 crores. The inquiry report suggested that since power supply would continue to be made to the consumers by the DISCOMs the winding up of the RESCOs would not affect the customers at all and would help reduce the potential losses to the DISCOMs by avoiding the intermediary establishment cost, reducing distribution losses, transformer failure rates and increasing the efficiency level in realising collections from consumers.

Earlier, the AP Electricity Regulatory Commission, which reviews the performance of RESCOs and issues licences to them on yearly basis, too had recommended the winding up of the Atmakur, Rayachoti, Kadiri East and Kadiri West societies on the basis of their continuous dismal performance on parameters such as distribution analysis, transformer failure, collection of arrears and payments to DISCOMs.

A reforms option report prepared by M/s KPMG Consulting Pvt Ltd and the enquiry commissioned by the Registrar of Cooperative Societies noted that the performance of the RESCOs was marred by various operational and infrastructural problems. They noted that the RESCOs were incurring cash deficits year after year, affecting adversely their ability to make payments for purchase of power, repay loans and maintain the distribution network.

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