THE MINISTRY of Power has prepared an 11-point agenda suggesting ways and means for reducing Aggregated Transmission and Commercial (AT&C) losses and improving fiscal health of power distribution companies. The Ministry also asked the state governments for making timely payment of power consumed by them.
The financial health of state electricity boards (SEBs) continues to be a cause for worry. State electricity boards like Bihar, Jharkhand, Haryana, Madhya Pradesh, Rajasthan and Uttar Pradesh are in poor financial condition. In states like Madhya Pradesh, AT&C losses add to the poor state of affairs of distribution companies. These losses are 42 per cent in the State mainly on account of poor collection efficiency, high rate of failure of distribution transformers and low level of investment in transmission upgradation.
Suggestions include changes in the way distribution utilities submit tariff fixation petitions to the regulators and introducing the concept of a proper time-bound business plan. The ministry has also asked state governments, including Madhya Pradesh, to pay for the power they consume and for the subsidies they announce. All this, the power ministry hopes, will help turn around the state distribution utilities.
The Ministry of Power has asked all utilities to adopt a multi-year tariff approach while filing the next tariff petition for ’07-08 before the state regulator. This has to be undertaken before December ’06.
It has also asked state utilities to have state-approved business plans with identifiable goals for three, six and 12-month periods. Utilities have been asked to seek approval of the state regulator for automatic tariff adjustment to recover additional fuel and other unanticipated costs that are not reflected in the annual revenue requirement (ARR).
While these steps are to be taken at the tariff end of the spectrum to improve revenues for the state utilities, the Ministry has asked the states to focus on reducing AT&C losses.
State governments have been asked to make full provision in the budget for cash payment of electricity dues on account of government departments, urban and rural local bodies, especially for electricity consumed for pumping water and street lighting. The ministry said that this payment would be monitored as part of the state government’s effort in improving collection efficiencies of distribution utilities.
When contacted Secretary Energy, Sanjay Bandopadhya said such directives from the Ministry is a routine thing. He, however, denied receiving any 11-point agenda.
Talking to the Hindustan Times, he said the State Government is already making concrete efforts for reducing AT&C losses and improving fiscal health of its power distribution companies. “We are in the process of reducing losses and improving fiscal condition,” said Bandopadhya.