Shunglu panel moots operational plan for discoms

Yogindra mohan

Patiala

The Shunglu Committee has linked taking over of discoms financial losses with an operational plan for franchising of distribution services.

Sources told Daily Post that according to the recommendation, the Reserve Bank of India (RBI) would offer line of credit to the Special Purpose Vehicle (SPV) to make purchases.

The distribution companies would pay interest on repayment liability purchased by SPV enabling it to pay interest charges of the RBI.

However, liability purchase by the SPV would be subject to the state governments nod for regular and adequate tariff increase, an operational plan for franchising of distribution services and financial

up gradation. Special Purpose Vehicle (SPV), to be headed by Reserve Bank of India, to take the Discoms losses on its balance sheets as assets.

The SPV would comprise of representatives from public sector banks who would jointly negotiate with the discoms for restructuring of their loans. The SPV would be owned by the apex bank to the extent of 76 per cent and the balance would be contributed by the Power Finance Corporation and Rural Electrification Corporation.

These recommendations are expected to serve the dual purpose of avoiding any exigencies for Discoms which are financially stretched to buy any power in the short term as well as bringing them under the leash of the

exchequer.

The report suggests power regulators should allow distribution companies to pass on the entire burden to consumers to help them come out of annual losses. It has also suggested restructuring distribution

companies, imposing penalties on consumers in high theft areas, prepaid metering for non-paying customers and billing agricultural users.

Another major suggestion is that Regulators must ensure that entire validated costs of distribution companies get recovered. Appellate Tribunal for Electricity in a suo motto case has ordered that regulators must ensure that tariff petitions are filed in time and tariff revised every year