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States may have to foot SEB dues

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KOLKATA, Feb. 14

THE Rs 41,000 crore owed by State electricity boards to the Central power utilities is set to be transferred to the State Governments, who will then issue bonds to the Centre.

The Union Power Minister, Mr Suresh Prabhu, said the Union Cabinet had already approved the draft of this proposal and the final papers would be put up for the Cabinet nod within the next fifteen days.

While Mr Prabhu made this announcement at an interactive session with members of the Indian Chamber of Commerce, a senior Ministry bureaucrat later said the Ministry did not expect any hitch in this proposal, which will clean up the balance sheets of the SEBs.

He said the necessary requirement for the Cabinet to take up the proposal, that is, its acceptance by half of the States, has now been fulfilled. "Nearly all the States have now agreed,'' he said.

The Minister also indicated a shift in the stance of the Ministry on aggressive wooing of FDI (for the power sector) for creation of fresh generation capacity. Of the 31,000 MW proposed to be added during the 10th Plan period, the bulk would be through public investment, he said, adding that each project would have to be commercially viable - the era of guarantees and counter-guarantees were over, the emphasis now was on R&M and distribution.

"Earlier we thought that IPPs were power reforms... we have changed gears now on the basis of past experience. Now we feel that the first objective of reforms should be to improve commercial viability of the power sector,'' Mr Prabhu said.

He emphasised that if this happened then everything else would follow. He said that lowering tariff, improving power availability and its quality were also the objectives of power reforms now. "Reforms would no longer be within a legislative framework only but also be in the realms of operation and technology,'' he said.

At a press meet later in the day, Mr Prabhu said a three-member committee had been set up under the IDFC chairman, Mr Deepak Parikh, for working out a package for financial re-engineering of the SEBs. He said the committee would submit its report by June-end.

Mr Prabhu also mentioned that new accounting norms were proposed to be introduced for the SEBs.

He said the papers pertaining to the setting up of a national grid would also be put up before the Cabinet to facilitate funds flow for creating a transmission network across the country for exchanging 30,000 MW of power. The present mechanism allowed transfer of only around 4,000 MW.

To a question, he said that an Appellate Tribunal was proposed to be set up to hear cases of power utilities against the respective state electricity regulatory commissions. This was one of the provisions of the New Electricity Bill that was proposed to be tabled during the monsoon session of Parliament.

The Minister, who utilised his visit to generate opinion on the power reforms, called on the State Chief Minister, Mr Buddhadeb Bhattacharjee, (who was not present during the earlier meetings). He also met a cross-section of the State's MPs and MLAs.

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