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Home News Power Sector News Haryana discoms heading for financial bankruptcy - HERC

Haryana discoms heading for financial bankruptcy - HERC

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HaryanaSeeking immediate government intervention to save Uttar Haryana Bijli Vitran Nigam (UHBVN) and Dakshin Haryana Bijli Vitran Nigam (DHBVN) from financial bankruptcy, Haryana Electricity Regulatory Commission (HERC) has stated that the discoms are heading for a crisis situation, courtesy their consistent failure to curb financial losses. Apart from recommending reforms, Haryana Electricity Regulatory Commission (HERC) has suggested reduction in government's power subsidy to agriculture sector in order to save the discoms from sinking into bankruptcy.

In its latest orders, issued by chairman Bhaskar Chatterjee, HERC has stated that "the commission's worry is centred around the functioning of discoms where the increasing distribution and aggregate technical and commercial (AT&C) losses are eroding the net worth of the companies and pushing them to the brink of financial bankruptcy."

Stating that the power utilities cannot expect bailout package from the government all the time, the commission stated that the discoms will have to improve their performance for survival. The orders further stated that the commission had earlier also brought the deteriorating financial position of the discoms to the notice of their respective managements as well as the state government, which requires prompt action.

The HERC in its orders on aggregate revenue requirement (ARR) of Uttar Haryana Bijli Vitran Nigam (UHBVN) and Dakshin Haryana Bijli Vitran Nigam (DHBVN) has stated that the "commission is of the view that the reduction in subsidy with some adjustments in tariff in line with the national tariff policy will decrease the burden on state finances."

As per the HERC estimates, the combined revenue gap of the UHBVN and DHBVN for 2011-12 is Rs 5612.14 crore for which the commission has blamed the discoms in its orders.

Expressing concern over the rising state subsidy, the commission has stated that the subsidy has shot up from Rs 1,102.5 crore in 2004-05 to Rs 3,422.13 crore in 2010-11. The commission states that the quantum of subsidy has increased manifolds due to increase in the number of tubewell connections in the state and also due to rising cost of power, but the agricultural power tariff has not kept pace with it and no efforts have been made to absorb the escalating cost.

While the UHBVN supplies 52% of its power to the agriculture sector, DHBVN gives 38% in the state.

However, the agriculture power (AP) consumers are paying just around 6% of the cost caused by them and the balance is met by way of subsidy from the state government. The commission has also expressed concerns over the low tariff charged from these consumers.

The orders state that the "commission is perturbed by the prevailing low tariff for the AP consumers and that a rational economic pricing of electricity can be a major tool for energy conservation and sustainable use of ground water resources."

"The commission is of the view that in a state like Haryana where in around 60% of the area the ground water has been over exploited and the watertable is receding at a rapid rate, an economic pricing of power would send the right signals to the single largest category of consumers," states the HERC orders.

The commission in the same orders has come down on the discoms for failing to bridge the revenue gap, curbing the transmission and aggregate technical and commercial losses resulting in a crisis situation in the power utilities. The commission has also recommended power reforms in the discoms stating that the losses suffered by discoms have to be examined with a fresh perspective for the survival of the power utilities.

The commission states that the distribution companies must reduce the losses as the future distribution scenario in the state does not look bright.

Source- Times of India


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