Yogindra mohan
Patiala

The Shunglu Committee report has recommended that power sector reforms in general and effectiveness of the state regulatory commissions, in particular, should be assigned priority.

High-level panel on financial position of distribution utilities headed by VK Shunglu submitted its 111-page report to the Planning Commission 10 days back. The panel was set up in July 2010 by the Planning Commission with the approval of the Prime Minister.

Highly placed sources in the Power Department told Daily Post that the report claimed that Electricity Act 2003 envisaged the separation of generation, transmission and distribution for reforms in power sector. Though there is separation of three works in most of the state electricity boards but the same is not in substance. The ownership, maintenance financial well-being are so inter-linked that it could not be said separate in any real sense of word. The second set of reforms in the form of open access in its broadest sense remains a dead letter. Moreover, emergence of truly autonomous SLDCs is at best still in infancy.

To bring out the distribution companies from their financial problems, the panel has proposed that a special purpose vehicle (SPV) should be set up as a corporate entity entitled to purchase loans of banks, where public sector banks believe it needs to redefine its portfolio. Banks will discuss revised repayment schedule with the state concerned. The SPV will take the pending loans only if concerned states agree to regular tariff increase, policy of planned franchising of distribution function. Further, the state would give an undertaking that the defaulted amount would be debited from their account. The franchisee system would be introduced in at least 455 cities of the country, which consume 40% of power. The franchisee will take away assets created during the period on expiry of licencee period. The chairperson of SPV would be a nominee of Reserve Bank of India. The other members will be Chairmen of Central Electricity Regulatory Commission (CERC), Power Finance Corporation and Rural Electrification Corporation, two representatives of banks and two independent directors with professional background of power sector. The share capital of the SPV would be held by RBI (76 per cent), while the PFC and the REC can hold the balance.

The report on financial heath of utilities states the total state government loans on utilities are Rs 24,079 crore and other loans are Rs 1,60,662 crore. The liabilities of utilities are Rs 1,53,356 crore.

The chairman of discoms should have a tenure of three to five years. He can be a professional or exclusive IAS and his tenure could not be shortened. Two non-executive independent directors from power sector shall also be there on the discoms board. Discoms would have to undertake capital expenditure as a first priority, which will yield additional income. The panel has recommended that R-APDRP scheme should be extended in the next plan and should cover towns with population of 30,000 and above as per Census 2011. Electronics meters and pre-paid metres consumers under the RGGVY scheme should be billed. Minimum agriculture tariff should be 50 paise per unit and eight hours power supply everyday should be ensured. In case of Punjab, power purchase in five year period ending was worth Rs 36,905 crore, which formed revenue expenditure of Rs 57,394 crore. The per unit power supply cost was Rs 5.75 per unit against realisation of Rs 5.10 per