The Hindu Business Line : Power Ministry rejects Rs 5,400-cr incentive claims by States

At a glance
Karnataka, Tamil Nadu, Punjab and Uttar Pradesh among the worst offenders.
APDRP is the Centre's key reform tool in power sector

New Delhi , Sept. 4

The Centre's key reform tool in the power sector — the Accelerated Power Development and Reforms Programme (APDRP) — is facing a problem in the form of bogus claims being furnished by States declaring "loss reduction" carried out by them in the power distribution sector.

Central grant

The loss reduction claims would have entitled them to a proportionate grant from the Central Government.

The Union Power Ministry has turned down incentive claims furnished by States totalling around Rs 5,400 crore over the last three years, with Karnataka, Tamil Nadu, Punjab and Uttar Pradesh among the worst offenders. In fact, the total incentive released so far by the Centre under the scheme is only to the tune of Rs 1,536.62 crore during the last three years, a fraction of the claims rejected so far.

Status report

According to latest APDRP incentive claims status report of the Power Ministry, Tamil Nadu's cumulative claim of Rs 706 crore furnished for 2001-02 and 2002-03 was turned down by the Centre as "no cash loss reduction was found on scrutiny." In the case of Uttar Pradesh, a claim of Rs 281 crore was turned down for 2002-03, while in the case of Andhra Pradesh, a claim of Rs 147 crore for 2003-04 was rejected by the Centre on account of the same reason. In Karnataka's case, a cumulative claim of Rs 619 crore for 2002-03 and 2003-04 was turned down by the Centre, again as "no cash loss reduction was found on scrutiny."

In the case of Orissa, a claim of Rs 265 crore for 2003-04 was turned down as private utilities engaged in power distribution in the State, were not eligible for APDRP claims. Bihar's claim of Rs 422.12 crore for 2001-02 was turned down as they were based on provisional accounts, while in the case of Delhi, a claim of Rs 256 crore for 2001-02 was turned down as they were based on the erstwhile Delhi Vidyut Board's unaudited accounts.

How it works

Under APDRP, States have been promised incentives from the Centre in the form of grants of up to 50 per cent of cash loss reduction managed by them annually in their power distribution sector. The year 2000-01 was fixed as the base year for calculating the reduction of loss during the subsequent years. Losses are calculated as net of any subsidy and tariff compensation given by the State Government both in the base year as well as during the subsequent years.

All types of subsidies are also netted off and auditors' qualifications affecting the profit or loss for the period under scrutiny are also factored out. Incentive in the subsequent years is given on the incremental loss reduction effected by the utility.