The Centre may have to extend the December 31 deadline for states to submit proposals for availing the debt recast facility for their loss-making state electricity boards (SEBs) given the tardy progress in implementation.
Although eight states, including Uttar Pradesh, Rajasthan, Haryana, Punjab and Tamil Nadu, have expressed interest in tapping the R1.9-lakh-crore-debt restructuring lifeline thrown by the Centre to the ?SEBs, only Rajasthan has submitted its proposal so far.
Union power secretary P Uma Shankar said that his ministry has not yet taken a view on extension of last date for submission of the debt recast proposal, but ?he did not rule out the possibility. ?We have not yet thought about it (deadline extension),? he?said.
Although states like UP and Tamil Nadu have appointed consultants to work out their debt restructuring plan, they may not be able to meet the current deadline for submission of proposal. The proposal has to be approved by the respective state cabinet and concerned electricity regulatory commission.
Moreover, state governments are required to take over half of their SEBs? debts, which is not easy given that they also have to comply with their fiscal discipline targets.??The process of finalising the debt restructuring plan for SEBs?will take time as it involves consensus across the government,? said Shubranshu Patnaik, senior director, consulting (energy and resources), Deloitte India.
For one, UP is?yet to initiate the process for securing regulatory approval for their SEBs? financial restructuring plan. ?We have not yet received any debt recast proposal for SEB from the state government,? a senior official of the UP State Electricity Regulatory Commission told FE.
Besides taking over of SEBs? loan by the state government, the bail-out package has also stipulated tough conditions like adjustment of fuel costs on a quarterly basis, timely tariff revision and advance payment towards subsidy provided by states to agriculture sector electricity consumers. There will be strict monitoring by the Centre to ensure that states comply with the stipulated conditions for availing debt recast facility. ?This is to avoid the possibility of SEBs reverting to their old habits.
Industry experts say state governments are hesitant about taking on these binding reform commitments ahead of the general election due in 2014. Madhya Pradesh has already declined the Centre?s financial package for discoms.
Recently, the Akhilesh Yadav-led government in UP announced that it would provide free power to 2 crore small farmers of the state, pouring cold water over the Centre?s hopes for expeditious implementation of power sector reforms.
Initially, only six states — Tamil Nadu, Andhra Pradesh, Rajasthan, Punjab, Haryana, Uttar Pradesh ? had expressed interest to avail the debt recast facility, but, later, Jharkhand and Karnataka also decided to come on board. Uma Shankar recently held a meeting with energy secretaries of these states to review their preparedness to tap the facility. ?The power secretary had expressed satisfaction at progress reported by states.
The Centre has approved the debt restructuring scheme on recommendations of the Shunglu committee set up to study factors impacting SEBS? financial health. The committee has recommended overhaul of the selection process for senior officials of state electricity commissions to prevent state governments from interfering in their functioning.
Further, it has suggested adoption of franchisee model or outright privatisation of loss-making power distributions circles.
SEBs? accumulated losses are estimated at R1.9 lakh crore as at March end. But significantly, this figure does not include loss of electricity quantum that they suffer due to widespread theft and technical reasons. ?On an average, 24-29% of electricity supplied by SEBs remains unaccounted. If this is included, SEBs? losses might work out much higher.
