Debt restructuring: Haryana may opt for franchisee system
Manish Sirhindi
Tribune News Service

Yamunanagar/Ambala, Oct 1
To take advantage of debt restructuring, Haryana is likely to opt for the franchisee system, a move which has been opposed by power engineers.

According to highly placed sources in the power utilities, Haryana is amongst the seven states that are supposed to be major gainers of the central government’s scheme of debt restructuring. To take advantage of this, the government would have to approve the franchisee system.

The sources said the power utilities had a loan of around Rs 19,500 crore, including Rs 5,500 crore of short-term power purchase. The line losses were in the range of 25 per cent. Power theft was also a major problem as some influential people were involved in this. Non-payment of power bills in certain pockets of Haryana was also a cause of concern for the financial health of the power utilities.

The sources said the state government was in the process of merging the two discoms because of a number of problems. There were different sets of rules in the two discoms. The line losses were also in variance with each other and so was the availability of material.

In 2002-03, a financial package had been introduced by implementing the Ahluwalia Committee Report by which outstanding dues of state electricity boards of about Rs 43, 000 crore were securitised by the state governments through the issue of bonds. As the cost of power supply was more than the average revenue realised, the SEBs of the country again went into red.

However, putting up a strong resistance against the proposed franchisee system, finance secretary of the North India Power Engineers Federation said power engineers were of the view that the franchisee system in power distribution would ultimately lead to privatisation of discoms and benefit some vested interests.

Under political pressure to sell below cost and losing more than a quarter of power supply to theft and decrepit networks, distribution companies had been borrowing for years to fund their losses, he said. Further, years of populism, corruption and mismanagement were the main reasons for the losses suffered by discoms.

The franchisee system would result in higher tariff to the consumer to ensure high profit margins for the franchisee.