PRIME MIN­IS­TER TAKES STOCK OF SICK POWER DIS­TRI­BU­TION COM­PA­NIES

STATES WITH HIGH EX­PO­SURE HAD RE­QUESTED FOR RE­LAX­ATION OF FRBM LIMIT

Resource Digest - - EXPANSION -

Prime Min­is­ter Naren­dra Modi has dis­cussed the pro­pos­als moved by the ‘dis­tri­bu­tion re­forms com­mit­tee’ set up by the Union power min­istry, to help the ail­ing power dis­tri­bu­tion sec­tor. The com­mit­tee, which had held a meet­ing with all state elec­tric­ity boards, sug­gested a slew of ‘stock and flow’ mea­sures to tackle the debt ex­po­sure of the sec­tor to­talling Rs 3.17 lakh crore.

Power min­is­ter Piyush Goyal and se­nior of­fi­cials — from the Prime Min­is­ter's Of­fice, and power and fi­nance min­istries — at­tended the meet­ing. Of­fi­cial sources said the states with the high­est ex­po­sure — Ra­jasthan, Ut­tar Pradesh, Haryana, Jhark­hand, Bi­har, Andhra Pradesh, Tamil Nadu and Te­lan­gana had re­quested for re­lax­ation of Fis­cal Re­spon­si­bil­ity and Bud­get Man­age­ment (FRBM) limit.

FRBM rep­re­sents the amount of deficit a state can have. A re­lax­ation on it would trans­late into states ad­just­ing more fis­cal deficits in their pub­lic ac­counts. Of­fi­cials said the Cen­tre was work­ing on a two-pronged ap­proach to help the fi­nan­cially sick and tech­ni­cally un­sound dis­coms.

“For the ac­cu­mu­lated losses, it was pro­posed that the state gov­ern­ment take over and is­sue bonds against the same. To bring in op­er­a­tional ef­fi­ciency and en­sure losses don’t ac­cu­mu­late again, re­spec­tive dis­coms will have to re­duce their AT&C (ag­gre­gate tech­ni­cal and com­mer­cial losses) in a time­bound man­ner,” said a se­nior of­fi­cial with one of the states who at­tended the meet­ing. The power min­istry has not fi­nalised any bailout plan for the dis­coms, said the source, adding that it has been cat­e­gor­i­cally tran­spired to the com­mit­tee that any­more fund dis­bur­sal would end up in losses and, hence, should be avoided.

“States will take the onus to re­form their power dis­tri­bu­tion busi­ness. Banks won’t lend any­more to th­ese dis­coms, so they will have ser­viced their debt as soon as pos­si­ble,” said the of­fi­cial who par­tic­i­pated in the meet­ing.

Among the tech­ni­cal re­forms sug­gested are im­prov­ing last­mile trans­mis­sion and dis­tri­bu­tion (T&D), re­duc­ing en­ergy theft, smart me­ter­ing and im­ple­ment­ing the two flag­ship schemes of the gov­ern­ment – In­te­grated Power De­vel­op­ment Scheme for ur­ban ar­eas and Feeder Sep­a­ra­tion Pro­gramme for ru­ral pop­u­lace.

The ‘sick’ sta­tus of the dis­coms is hurt­ing the sup­ply chain with power gen­er­a­tion com­pa­nies un­able to sell more power, de­spite sur­plus fuel avail­abil­ity.

The busi­ness of al­lied sec­tors such as con­struc­tion com­pa­nies for power plants, the over­all in­vest­ment in power gen­er­a­tion is in the neg­a­tive as the de­mand for power is sub­dued. De­spite 275,000 Mw of in­stalled ca­pac­ity, In­dia suf­fers from peak power deficit of three per cent., in the north and east it's high as 6per cent and 11per cent.

NAREN­DRA MODI, PRIME MIN­IS­TER

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