Financial Restructuring Plan approved by Cabinet

 By Haryananewswire

CHANDIGARH, MARCH 29

The Haryana Cabinet which met under the chairmanship of the Chief Minister, Mr Bhupinder Singh Hooda, here today approved the proposal of the Finance Department for financial restructuring of power distribution utilities.

          The Cabinet also authorized the State Level Monitoring Committee to take up the matter with the Central Government and finalise the Financial Restructuring Plan with amendments, wherever required.

          Under the scheme, as a part of the liability of the State Government, it will take over the liability of Rs 8162.09 crore of the two distribution power utilities by directly issuing bonds or infusion of funds for amount of 50 per cent of the liabilities calculated by March 31, 2012. These liabilities will be taken over in next two to five years when the fiscal space so allows, as provided in the FRP. The State Government will provide full support to the DISCOMS for repayment of interest and principal till the entire bonds corresponding to 50 per cent STL is taken over by the Government.

          The State Government shall also provide guarantees to the financial institutions on behalf of the distribution power utilities for their endeavour to access loans. The State Government has already provided guarantee for raising of loans by the distribution power utilities to the extent of Rs 19541.82 crore in financial year 2013-14.

          The State Government has already provided Rs 1246 crore in the second supplementary estimates to provide Rs 1256.18 crore for arrears of Rural Electrification Subsidy and the Fuel Surcharge Adjustment for the years 2010-11, 2011-12 and 2012-13. The State Government intends to release this amount before March 31, 2013. The State Government also needs to constitute a State Level Monitoring Committee as per the guidelines of the FRP scheme. The Committee will be headed by Chief Secretary as its Chairman and would have three other members including Administrative Secretaries-in-charge of Power Department and Finance Department and any other person to be decided by the Government. The Committee would meet on a quarterly basis to examine various issues.

          Haryana Power DISCOMs would also require support from the Central Government which would include liquidity support by incentivizing the DISCOMs for accelerated Aggregate Technical and Commercial (AT and C) loss reduction beyond three per cent annually for utilities with AT and C losses above 30 per cent and reduction beyond 1.5 per cent annually for utilities with AT and C losses below 30 per cent. It would be by payment of matching grant equivalent to the energy saved. As per the proposal for the turnaround action plan, the estimated amount works out to be Rs 216 crore.

          The Central Government will reimbursement support of 25 per cent of principal repayment of State Government for the liability taken over by it.

          In addition, the Haryana Electricity Regulatory Commission will issue the tariff orders by April 30 of each year to ensure that the revised tariffs are made applicable with effect from April 1 every year. The State Government would release the RE subsidy upfront to the distribution power utilities immediately thereafter.

          The distribution power utilities would exhibit maximum commitment in the discharge of its functions to bring about operational efficiency through professionalism and leveraging technology. The distribution power utilities need to reduce their AT and C losses progressively, besides 100 per cent metering of consumers.