The Hindu Business Line : Gujarat EB makes a turnaround wiping out Rs 2,542-cr loss

Tough action
Financial prudence, economy measures, and some really tough and politically-sensitive steps help GEB to come out of the mess.
Action against power theft and non-payment of bills are the driving factors in this regard.

Ahmedabad , June 12

The Gujarat Government has successfully turned around the Gujarat Electricity Board (GEB) which was about to go sick five years ago, to enable the latter to earn a net profit of nearly Rs 200 crore. And that too, without raising power tariffs, the Minister of State for Energy and Petrochemicals, Mr Saurabh Patel, told Business Line.

Financial prudence, economy measures with increasing revenue and reducing expenditure, and some really tough and politically-sensitive steps, such as completely ignoring the pleas of politicians, including those of the ruling BJP, have paid handsome dividends to GEB.

The Board has seen one of the most talked-about turnaround in recent times with this year's profit of Rs 200 crore replacing the whopping cumulative loss of Rs 2,542 crore in fiscal 2000-01. Mr Patel credited this turnaround to the "political will" of the Gujarat administration . . The Board officials were directed to deal sternly with cases of power theft and non-payment of bills either by individuals or by companies.

Action against violators

He said the State Government set up five regional special police stations to deal with such cases and punished the violators.

Interestingly, it even appointed 500 retired army personnel to keep the power offenders in check. Thousands of theft cases were detected and disconnected; they were reconnected only after the violators, including companies, paid their arrears. A number of violators were convicted by the courts. Only recently, a woman in a North Gujarat district was also convicted with a year's imprisonment. The GEB appointed managers with accountability clearly given to them. As a result, nearly 20 lakh connections were checked and rechecked annually.

The GEB officials, accompanied by police, went from village to village and town to town at night to check power theft, braved the irate people who attacked them at several places and protested in all possible manners. Once, an official was even kidnapped and kept in bondage until rescued by the police. Despite these, the Board went ahead with stern steps, Mr Patel pointed out, in accordance with the provisions of the New Electricity Act that empowered the authorities to lodge criminal cases against power thieves.

The Board itself was split into four regional power generation companies, four regional distribution companies, one transmission company and one parent company.

Besides, the power purchase agreements (PPAs) with independent power producers (IPPs) were re-negotiated to the benefit of the State. Under this policy, adopted in 2003-04, the Government renegotiated PPAs with two private and two State-owned power producers.

As a result, a total of Rs 559 crore was saved on this score alone and all outstanding dues were wiped out.

Additionally, GEB also succeeded in restructuring loans worth Rs 4,130 crore and persuaded lenders to reduce interest rates from 9.51 per cent in 2003-04 to 8.6 per cent in 2005. With this measure, it managed to save Rs 270 crore on interest payments annually.

In some cases, even the quality of fuel was experimented with. In the power generating stations, GEB reduced input costs by using washed coal or the one imported from Indonesia.

Together, these measures saved nearly Rs 160 crore. In view of these power reforms, turnaround and timely payment of pending power purchase bills, the National Thermal Power Corporation gave an incentive to the tune of Rs 312 crore to GEB whose revenues began to grow by leaps and bounds.

From Rs 786 crore in 2004, it grew to Rs 1,029 crore in 2005 and Rs 1,300 crore in 2006.

According to the Central Electricity Authority, the per capita consumption of power in Gujarat was 1,321 units in the financial year 2004-05, which was double the national average.

Mr Patel also claimed that Gujarat was the only State in the country in which all 18,000-odd villages were connected to a 24-hour power supply with no load-shedding anywhere. In Ahmedabad and Surat, power generation and supply had long been privatised.

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