Power reforms plan to be evaluated

The power ministry and Planning Commission are looking to separately evaluate the Accelerated Power Development Reform Programme (APDRP).

The APDRP, the first incentive-based reform programme in the power sector aimed at accelerating distribution reforms, is widely perceived to be a failure.

The Planning Commission is of the view that the programme, launched by the government in 2003, has not had the desired impact and should be reformulated as a purely incentive-based scheme.

The programme was not meeting its objectives and focussed too much on expenditure instead of the outcome, said officials.

The plan body is, therefore, considering a proposal to review the programme. The Programme Evaluation Office is expected to outsource the job to an independent agency.

The power ministry, on the other hand, is contracting the appraisal to five independent agencies, including The Energy and Resources Institute (Teri), Indian Institute of Management, Ahmedabad, and the Administrative Staff College of India. None of these agencies were involved in the formulation of the APDRP.

The power ministry is also strengthening the APDRP and increasing the number of parameters on which states are monitored from 15 to 29. These are proposed to be raised further to 40 by the end of next month.

These include the setting up of computerised billing centres, outsourcing activities like meter-reading, energy accounting, energy audits, turnkey contracting and establishment of customer care centres, power ministry officials said.

The APDRP is aimed at reducing aggregate technical and commercial (AT&C) losses to 15 per cent, bring about commercial viability in the power sector, reduce outages and interruptions and increase consumer satisfaction. The scheme has two components "" the investment component and the incentive one.

Under the investment component, additional central assistance of half the project cost is provided for strengthening and upgradation of sub-transmission and distribution networks.

The rest has to be provided by state electricity boards (SEBs) and utilities from the Power Finance Corporation, Rural Electrification Corporation, other financial institutions or from their own resources as counter-part funds.

The release of funds is linked to measurable targets. The performance criteria include putting in place a regulatory framework, restructuring of SEBs, reduction in transmission and distribution losses, curtailing revenue arrears, plant load factor, manpower reduction and reduction of cash losses.

Under the incentive component, an incentive equivalent to 50 per cent of the actual cash loss reduction by SEBs/utilities is provided as grant. For this, 2000-01 is the base year for calculation of loss reduction in subsequent years.

Proposed measures

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• The Planning Commission is of the view that the programme, launched by the government in 2003, has not had the desired impact
• The power ministry is also strengthening the APDRP and increasing the number of parameters on which states are monitored from 15 to 29
• The APDRP is the first incentive-based reform programme in the power sector aimed at accelerating distribution reforms