States should not get into discom debt rejig: Tata Power

PTI New Delhi | Updated on January 27, 2013 Published on January 27, 2013

Amid rising concerns about debt woes of power distribution companies (discoms) Tata Power has suggested that financial rejig of discoms should be done through regulatory commissions and not directly by state governments.

Tata Power’s viewpoint come against the backdrop of Centre’s financial restructuring plan for discoms, under which half of the debt burden is to be shared by respective state governments.

“My point of view is that financial restructuring should be done through regulatory commissions and should not be done by the states.

“That means money should be made available, as a financial support, to regulators who should then set targets and against the achievement of those targets, allow the restructuring to happen,” Tata Power Managing Director Anil Sardana told PTI.

Each state has its own State Electricity Regulatory Commission (SERC). Power distribution companies’ debt burden, which stood at a staggering Rs 2.46 lakh crore at end of March 2012, is a major concern for the sector that is already grappling with severe fuel scarcity.

“... in sectors like power distribution and generation, government should not have any role to play because these are managed by the private sector,” Sardana said.

“So, I feel that government as part of reform process and thinking from customer point of view (should) ensure that the arrangements are such that the government demands performance rather than being itself a subject of performance,” he noted.

According to him, governments have a solid role to play and solid empowerment in its hand, where every key functionary in the government can demand performance. “That should be the focus,” he added.

“Otherwise, their thinking becomes different as they are the people who are to deliver. Thinking becomes very restrictive,” he noted.

To address the woes of discoms, the Power Ministry in October last year had mooted a financial restructuring plan where taking over 50 per cent of short term liabilities of these utilities by respective state governments was a major proposal.

Currently, Tata Power has an installed generation capacity of about 7,700 MW.

Published on January 27, 2013

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