(a) whether the Government propose to restructure the existing power management system in the country to bring about improvement in the power sector;
(b) if so, the details thereof;
(c) if so, the names of states to which this proposal has been referred so far; and
(d) the reaction of the State Governments thereto?
THE MINISTER OF POWER
( SHRI P.R. KUMARAMANGALAM )
(a) to (d) : Yes, Sir. The Government of India proposes to
restructure the existing power management system in the country
to bring about improvement in the Power Sector. In order to
address the various issues related to reforms, a Power Minister
Conference was held on 26.2.2000. A copy of the Resolution
adopted in the Conference is Annexed.
ANNEXURE
ANNEXURE REFERRED TO IN REPLY TO PARTS (a) TO (d) OF UNSTARRED
QUESTION NO.2756 TO BE ANSWERED IN THE LOK SABHA ON 13.3.2000.
RESOLUTIONS OF THE CHIEF MINISTERS/POWER MINISTERS
CONFERENCE HELD ON 26.02.2000
The Power Ministers` Conference took note of the
impending difficult situation facing the power supply industry in
the country due to continuing decline in commercial viability of
the sector as a whole. It noted the fact that:-
1. Outstanding dues of CPSUs have been increasing and have
now reached Rs. 23,000 crores. This trend if maintained
would adversely affect their current operations apart
from inhibiting their future expansion plans.
2. Financial closure for private power projects is
becoming increasingly difficult.
3. The states are unable to finance new projects on their
own.
4. Increases in budgetary support from state governments
as well as central government for this sector is not
feasible due to fiscal deficits.
II. The primary factors responsible for this unsustainable
financial situation are:
i) Theft and pilferage at the macro level are estimated to
be over Rs.20,000 crores per annum.
ii) Technical losses in transmission & distribution for the
country are also too high.
iii) Large number of the thermal stations in the state
sector run at an operational efficiency of less
than 40%.
iv) The average annual operational losses of the State
Power Sector for the country is over as. 12,000 crores.
III. It was also recognised that the cross subsidies cannot
be sustained if industrial tariffs make Industry non-competitive
in the new environment of increasing globalisation with
elimination of quantitative and other restrictions. It becomes
necessary to ensure that Indian Industry is not handicapped by
unsatisfactory power supply or by tariff which makes it
non-competitive. Further, the consumer, including the farmer has
a legitimate claim for uninterrupted good quality power supply.
His willingness to pay reasonable costs is underestimated.
RESOLUTIONS
1. The Power Ministers` resolved after taking into account
all the problems facing the power sector, that with the intention
of achieving commercial viability and providing power at
reasonable rate to all, reform must be undertaken with
determination, vigor and a sense of urgency. Delay in reform
only increases the financial cost of reforms, and the burden of
liabilities only increases. Reforms must begin to show results
within the next 2-3 years. The key elements of the reform
strategy are :-
a. Energy Audit at all levels.
b. Time-bound programme of 100% metering of all consumers
by December 2001.
c. Reduction and finally, elimination of power theft
within a specified time frame.
d. Strengthening/upgradation of sub-transmission and
distribution system by taking sub-station as an unit on
a priority basis.
2. If the above appears unattainable in the existing set
up corporatization/cooperatization/privatization of distribution,
would have to be undertaken.
3. Since a large number of thermal stations within the
State sector are running at a PLF below 40%, immediate Renovation
& Modernisation including Life Extension would need to be
undertaken on an urgent basis. Similarly, R&M/LE would require
to be undertaken for old hydel power plants on priority.
4. Effective functioning of State Electricity Regulatory
Commissions is essential for rationalization of tariff, and
balancing the interests of the consumer and the need for
commercial viability of the utilities in the environment where
private sector participation in the industry is expected to
gradually increase.
5. Unbundling and corporatization of State Electricity
Boards/bench-marking through separate distribution profit
centres/corporations/companies may facilitate the Regulatory
Commissions in promoting competition within the power supply
industry - competition being the key to lower prices.
6. It was noted that the power system network in country
has an unmatched reach to consumers and with the installation of
optic fibre cables along the existing power lines using its right
of way, it has the potential of generating very large resources
in the coming years by providing facilities for multipurpose
communication including cable TV, IT services, Telecom services.
etc. Hence efforts need to be made to creatively tap this
potential source of large revenue from convergence.
7. In order to promote reforms, a new draft central
legislation which obviates the need for separate enactments for
the States, is being considered. The draft Bill submitted by the
NCAER would form the basis for a national debate and a consensus
on the contents of the new Bill. The States would be sending
their detailed comments on this draft Bill, to the Ministry of
Power at the earliest.