Wednesday, July 13, 2011


Minister of Power Calls for Urgent Reforms in Power Distribution Sector

Minister of Power Shri Sushilkumar Shinde has called upon the states to take effective steps to ameliorate the poor financial condition of power distribution utilities. He was inaugurating the State Power Ministers’ Conference on “Distribution Sector Reforms” in New Delhi today. He urged the State Power Ministers to take stock of the situation in their states, devise a utility-wise turn-around plan and monitor its implementation at the highest level before the situation becomes unsustainable. He said power is a concurrent subject and responsibility for distribution and supply of power to rural and urban consumers primarily rests with the states.

Mr. Shinde asked the states to ensure that subsidies to the electricity distribution utilities for the subsidised sectors like agriculture and rural households are released in advance as per Section 65 of the Electricity Act and the DISCOMs are able to realise adequate tariff to not only bridge but ensure that the gap between average revenue realised and average cost of supply is positive. He said while every State is free to give subsidy to farmers and other weaker sections, it is essential that the State Governments disburse the subsidies announced to run the utilities as companies on commercial lines, as envisaged in the Electricity Act. Shri Shinde also expressed concern that barring a few utilities, audited accounts are not being maintained up-to-date which runs counter to the principles of utilities functioning as commercial entities post unbundling.

Based on the feedback received from the states, Mr. Shinde announced that all towns with population of 15,000 and above (5000 for special category states which include seven NE states, Sikkim, J&K, Uttarakhand and Himachal Pradesh) and all district headquarter towns in special category states will be considered for inclusion under R-APDRP. He announced that underground cabling can now be undertaken under Part-B in all eligible towns of R-APDRP. This will be particularly useful in towns of religious and tourist importance.

The Minister informed that some states have experimented with the input based distribution franchise system in some of their towns which has shown good results. He said that learning from these experiences, Ministry of Power is finalizing a Standard Bidding Document to facilitate the state governments to appoint input based franchises. This document has been developed in consultation with the States and will shortly be made available to the states.

Minister of State for Power Shri K.C. Venugopal in his address said that strong political will is required to tackle the commercial losses. He said there are stringent provisions in the Electricity Act to deal with theft and pilferages of electricity. Stating that while 23 states have set up special courts and 11 states have set up special police stations, the Minister urged the other states to consider taking similar actions.

Addressing the gathering, Planning Commission Deputy Chairman Shri Montek Singh Ahluwalia expressed concern over the mismatch between tariff and cost and underlined the need to reduce AT&C losses. He suggested to seriously look into the possibility of introducing time of the day tariff with higher tariff during peak hours and operationalisation of open access to consumers. In his welcome remarks Secretary, Power Shri P. Uma Shankar said while there is overall reduction in AT&C losses at the national level, the problem is acute in some states. He underlined the need for taking effective steps to address the situation especially with respect to reduction in AT&C losses and ensuring adequacy to tariff increase, besides advance release of subsidy by the Government to the utilities.

“Power Compendium – 2011, a compilation of Acts, Rules, Policies, Guidelines” was also released on the occasion by Minister of Power Shri Sushilkumar Shinde.

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