"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.