The Hindu Business Line : CARE asked to assess cash losses of SEBs

CREDIT rating agency CARE has been mandated by the Ministry of Power to assess the reduction in commercial losses by State Electricity Boards (SEBs) for being eligible for incentives under the Accelerated Power Development and Reforms Programme (APDRP).

The Power Ministry has devised a six-level intervention strategy (encompassing initiatives at national, State, SEB/utility, distribution circle, feeder and consumer levels) in order to achieve the commercial viability of the SEBs.

Mr P.N. Satheesh Kumar, Head of Advisory Services, CARE, said that the programme focuses on the upgradation of sub-densely electrified zones in urban and industrial areas and on the improvement in commercial viability of SEBs.

The emphasis is on reduction of aggregate technical and commercial (AT&C) loss, improvement in quality, reliability of power and better consumer satisfaction. The agency expects to complete the project by mid-March, subject to the flow of information from the SEBs.

It may be mentioned here that the Power Ministry's intervention strategy for distribution reforms has envisaged an expenditure of Rs 40,000 crore under the APDRP scheme during the Tenth Five-Year plan. This includes investment and incentive components.

An outlay of Rs 20,000 crore has been provided as Central plan assistance under the scheme to State governments for implementing the upgradation and modernisation of sub-transmission and distribution under the investment component. An additional outlay of Rs 20,000 crore has been provided to incentivise the State utilities with regard to cash loss reduction.

The scheme, according to CARE, has two components: Investment for strengthening the sub-transmission and distribution systems and incentives to motivate the utilities to reduce cash losses.

Under the former, projects relating to upgrading and fortifying sub-transmission and distribution network (including energy accounting and metering) in densely electrified zones in urban and industrial areas will be eligible.

Under the incentive component, funds are to be provided by the Power Ministry to the SEBs for actual reduction in cash loss by way of one for two matching grants. This component has been introduced to encourage the SEBs to reduce their financial losses. The cash losses are calculated net of subsidy, and receivables and expenditure on accrual basis.