The Committee also comprises representatives from the Ministry of Finance, the Reserve Bank of India and officials from the state governments."The committee would suggest measures to improve the financial health of power distribution utilities," Chaturvedi said. It would prepare a report in the next 6 months, before the start of the 12th Five Year Plan Period (2012-17), so that the suggestions can be incorporated in it. "We will ensure that there are no defaults on payments... before the start of the 12th plan, we would put the mechanism in place," Chaturvedi said.
Finance Minister Pranab Mukherjee, at the National Development Council meeting last week, had asked the states to raise electricity charges to improve the financial health of power distribution companies.They are facing difficulty in raising fund from banks on account of poor balance sheets.
Some of the distribution firms have not raised tariffs for 10 years and their total losses are estimated to be Rs 70,000 crore.Meanwhile, the Ministry of Power has proposed that the state governments would consider converting loans due from them to the distribution utilities as state government equity to ensure capital infusion and improvement in net worth of the utility.
The state governments would have to ensure that the accounts of the utilities are audited up to the year 2009-10 and the accounts of a financial year are audited by September, of the next financial year (2010-11).Power Ministry has set a target of adding 1,00,000 MW of electricity during the 12th plan period.
Earlier, a Task force headed by Planning Commission member BK Chaturvedi on operationalising open access has invited opposition from various corners. In its report, the task force has suggested amendment to Electricity Act 2003 to make it explicit that power supply by a generating company to a distribution licensee includes supply through an electricity trader. It has also suggested pricing cap and trading margins for inter-state trading of electricity.
The task force has also suggested maximum trading margin to be allowed to a single trader. In yet another contentious recommendation, the task force has suggested that the government should allow release of Accelerated Power Development and Reforms Programme (APDRP) assistance to states that enable consumers to exercise their right to open access. The power ministry has opposed this as the revised APDRP has already been approved by the Cabinet.
Source- Times of India