The delays in the implementation of financial restructuring plan of the ailing distribution utilities announced by the Centre in September last year would come up for review at the meeting convened by the power ministry with state power ministers on February 5. The accumulated losses of the state power distribution companies (discoms) are estimated to be about Rs 1.9 Lakh crore as on March 31, 2011.
Besides, the power ministers would deliberate on the progress made on the implementation of Centre’s flagship programmes including Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY) and the Restructured-accelerated power development and reform programme (R-APDRP).
Power Ministry official told Business Standard “This is the maiden interaction between power minister Jyotiraditya Scindia and state power ministers to take stock of the financial restructuring of distribution utilities. The government has extended the validity date till March 31, 2013 from December 31, 2012. However, several distribution utilities have yet to submit their proposals due to the delays involved in getting approval from the respective states. Besides, there is a visible trend wherein some distribution companies prefer load shedding despite availability of power in the market to cut financial burden.”
Maharashtra government official said the financial restructuring plan of its distribution company, MahaViataran would soon be cleared.
ICRA in its report released on January 30 said the debt restructuring is inevitable for the stressed utilities, as alternate options are limited, given the tightening of the credit disbursement conditions by lenders. However, timely implementation of this scheme & political will of the State Governments to comply with the stipulated conditions would be a key challenge.
Subsequent to ruling by Appellate Tribunal for Electricity (ATE) in November 2011, tariff orders for FY 2012-13 have been issued by State Electricity Regulatory Commissions (SERCs) in almost all the states. Further, tariff petition filing for FY 2013-14 has been done by discoms in about eight states so far, although with delays. Also, a framework for Fuel & Power Purchase Cost adjustment (FPPCA) has been approved in many of the states in last 12 month period.
Notwithstanding these positives, tariff determination for FY 2012-13 in many states have not been fully cost-reflective so as to avoid a tariff shock, which has led to creation of additional uncovered revenue gaps or “regulatory assets”. In ICRA’s view, the quantum of tariff hikes, the manner in which regulatory assets are proposed to be recovered and timelines in terms of filing the tariff petitions and finalization of tariff orders remains critically important, going forward.
Meanwhile, the state power ministers would also review the implementation of RGGVY. According to the report released by Central Electricity Authority, Overall, by the end of Eleventh Plan, out of the total 593732 villages in India (Census 2001), 556633 villages (93.8%) have been electrified. Some of the villages which have been electrified, that is, connected to the grid, have not yet been energised. The gap is primarily in the States of Bihar, Jharkhand, Odisha and Assam. Most of the projects are expected to be completed during 2012 except in the north-eastern region and in areas involving difficult terrain.
“States will highlight deficiencies in the RGGVY programme and remedies. About 6000 villages electrified till December 2011 were still not energized due to lack of supporting network or other resources. Secondly, access to electricity in rural areas is still limited, especially in smaller hamlets. Poor financial health of utilities and high cost of power act as a disincentive for States to give new connections,” the official said.
On Restructured-APDRP, the official informed that the issue was discussed at the National Development Council meeting. The Working Group for the Twelvth plan has assessed a total investment requirement for the distribution sector at Rs 3.06 lakh crore. The population norms under R-APDRP for including a city under R-APDRP may be relaxed by lowering the existing population threshold. The official admitted that more extensive coverage will bring uniformity in billing and customer service of the utility across all its service areas. “The issue of covering assistance to private distribution companies under Restructured-APDRP will be discussed at Tuesday’s meeting,” the official said.
