In a move set to turn the clock back, the Bharatiya Janata Party (BJP) government in Haryana has initiated the process for merger of its two power distribution corporations, Dakshin Haryana Bijli Vitran Nigam (DHBVN) and Uttar Haryana Bijli Vitran Nigam (UHBVN), into a single entity.
The state power department has written to the two distribution companies to inform them about the merger move. “We have received a letter from additional chief secretary, power, on the merger of the two stateowned corporations,” DHBVN managing director Arun Kumar told Hindustan Times. “The basic work of UHBVN and DHBVN is similar. We will start working on the merger process as per the government orders,” he said.
The two discoms have been asked to set up a committee of chief engineers to work out the implications of merging of their various cadres into one cadre. “A reputed firm of chartered accountants should be engaged to complete formalities relating to merger of the companies,” reads the letter.
The two distribution corporations, along with Haryana Power Generation Corporation (HPGCL) and Haryana Vidyut Prasaran Nigam (HVPN), were created in 1999 after unbundling of the erstwhile Haryana State Electricity Board (HSEB), ridden with inefficiencies and huge debt.
Haryana was the second state after Orissa to initiate power sector reforms, including restructuring and corporatisation to bring operational efficiency in the functioning of the power sector. While the two new corporations had started with a clean slate, they failed to bring about much improvement in their work culture, infrastructure and performance, landing in a dismal financial position soon.
The two power utilities have been in dire straits for a long time due to their continued inefficiencies and mounting losses, despite being bailed out twice. The merger proposal comes more than a year after the Haryana Electricity Regulatory Commission (HERC) had advised the state government to merge the two discoms for improving efficiency in delivery of electricity service and ensuring quality supply of electricity to consumers at a reasonable rate, citing the small size of the state.
The power sector regulator had cited improved cost control, reduction in supply cost, saving in transmission cost due to synergy in planning and operations, benefits of maintenance coordination, maximisation of transmission system utilisation, rationalisation and redeployment of staff, reduction in working capital borrowings and enhanced managerial efficiency in support of its suggestion.
However, the rationale being given by the government and the regulator for merging the two corporations is more or less the same that they cited at the time of unbundling of HSEB in 1999. Though three distribution entities were proposed for reasons of better efficiency at that time, the then Bansi Lal-led HVP-BJP government had settled for two discoms.
“As is the case with smaller states, smaller power entities bring efficiency through competition. Their performance had shown improvement, though not to the desired level. DHBVN has been doing better than the utility supplying electricity to northern parts of the state,” a power sector expert said, requesting anonymity.
DHBVN, which supplies electricity to Gurgaon, Faridabad, Mewat, Sirsa, Fatehabad, Hisar, Bhiwani, Jind, Palwal, Rewari, Narnaul and Mewat, has lower distribution losses and outstanding receivables than the other utility. Jind district, considered a difficult area due to high losses, was initially part of UHBVN, but later transferred to DHBVN for level playing field. “The merger will not only end the competition that exists between the two utilities, but also transfer the inefficiencies of one to the other. The government needs to encourage competition by bringing in differential tariff to reward efficiency and paying customers instead,” he said. UHBVN supplies power to Kurukshetra, Yamunanagar, Ambala, Karnal, Kaithal, Rohtak, Sonepat, Panipat, Jhajjar and Panchkula districts.