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‘Sans professionalism, UDAY can’t bail out non-performing discoms’

bhopal Updated: Sep 25, 2016 15:39 IST

Ranjan, Hindustan Times, Bhopal
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(Kunal Patil/ Hindustan Times)

The Ujwal Discom Assurance Yojna (UDAY) can’t bail out state’s non-performing power distribution companies from future losses and accumulating financial burden if these companies don’t bring about an element of professionalism in their working, said experts on Saturday on the penultimate day of the four-day 17th Regulators and Policymakers Retreat in Goa organised by Independent Power Producers Association of India, laying emphasis upon stakeholders’ role in the scheme of things.

There four stakeholders are -- government, power distribution company, power regulator and consumer, said the experts, adding every stakeholder has his role to play for efficient functioning of a discom, better its performance and reduce the tariff. UDAY is a government of India scheme for the financial turnaround and revival of power distribution companies.

The central and state governments and three distribution companies of Madhya Pradesh signed a memorandum of understanding (MOU) last month under this scheme with an aim to revive those companies. As per the MoU, the state government would take over its own Rs 26,055-crore loan -- which is 75% of the total discom debt of Rs 34,739 crore as on September 30, 2015. This would help the companies reduce the interest cost. As per the scheme, the remaining debt of Rs 8,684 crore can be re-priced or issued as state guaranteed discom bonds at the rate of about 3% less than the average existing rate. The annual saving to the power distribution companies by way of reduced interest rate would be about Rs 2,215 crore.

Energy expert Sunil Wadhwa, who was present during the seminar, said a multi-pronged strategy was required to ensure power distribution companies function properly to meet the requirement of energy. The state government is supposed to ensure that discoms function properly and at the same time their performance improvement is also assessed, said Wadhwa, adding discoms’ head should have a fixed and long tenure so that he/she has ample time to translate his/her ideas into a reality and transform the functioning of the distribution companies from non-professional to professional ones. Laying emphasis upon constant and effective monitoring of companies’ performance, Wadhwa also said companies should have young and talented professionals from engineering, management and other fields.

According to Wadhwa and other experts, tariff is a major factor in ensuring financial health of companies, without which companies can’t survive. Hence, while the government has to provide subsidized power to the weaker section, it has to ensure that companies are adequately supported rather pushed to check power theft which is a huge problem to tackle with, they added.

The power regulator is supposed to fix cost effective tariff but this will not burn holes in the pockets of those genuine consumers who are taxed on account of the power theft by others, if the theft is checked effectively. Consumers also have a right to know about heads and amount of expenses incurred by discoms so that they can exert pressure on them to perform.