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Home News Power Sector News Will Bihar State Electricity Board's unbundling pay off?

Will Bihar State Electricity Board's unbundling pay off?

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BSEBThe state government is worried about the chances of financial improvement in the working of the erstwhile Bihar State Electricity Board (BSEB), now divided into five different companies with the objective of making them independent profit centres. Recent trends provide a very dismal picture about the chances of the companies to become profitmaking ones. Inquiries show that in 2006-07, the state government's annual subsidy to the BSEB was around Rs 448 crore. Instead of improvement in the situation, the government's contribution to the BSEB rose to Rs 2,500 crore in 2011-12. "We will be giving an additional amount of Rs 1000 crore to the erstwhile BSEB by the end of this year," said Rameshwar Singh, principal secretary, finance.

"Subsidy is not meant to be a lifelong support. It is a temporary measure to improve the financial health of the companies within a time frame," said an official. "If the current trend continues, the situation would be alarming for the financial health of the government," said a senior official of the energy department.

"The payment of additional subsidy would badly hit the existing plan size of the state government. The plan size would be automatically decreased if the trend of ballooning deficit and subsidy is not checked soon," said an official.

Inquiries showed that way back in 2001-02, the transmission and distribution (T&D) losses of the BSEB was around 39%. The subsidy is mainly given to cover this loss. In contrast, during 2010-11, T&D losses went up to 41% instead of showing a fall.

Power Finance Corporation, the main consultant for BSEB's restructuring, has claimed that the government would be able to reduce its subsidy over the next five years by making the newly-formed companies profitable ventures. But Bihar government officials are not ready to buy this theory. "If these companies are not able to become profitable in a year's time, then we have to rethink the situation," said a senior official.

Besides, the government has to cough up around Rs 4,500 crore for the payment of retiral benefits, arrears and other liabilities. "We have decided to make payment in a phased manner," Singh told TOI.

The newly-formed distribution companies have to make scientific fiscal management to increase revenue collection in order to put themselves on the track. Power theft has to be checked at any cost, said an official.

Source- TOI

 

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