New bill to make states accountable for SEBs

The government would soon draft a legislation to make states accountable for introducing new power sector reforms to improve the financial health of distribution companies. “This is part of the restructuring package, there will be a State Electricity Distribution Responsibility Bill which will be drafted by the Ministry of Power and would be sent to the states for enactment, we are working on that,” power secretary P Uma Shankar informed.

“The Bill is mainly to put onus on state governments for the health of State Electricity Boards (SEBs),” he said. In September, the government approved restructuring of Rs 1.9 lakh crore debt of State Electricity Boards. Under the scheme, 50% of the short-term outstanding liabilities would be taken over by state governments.

One of the mandatory conditions of the package is that 50% of the outstanding liabilities up to March 31, 2012 would be taken over by the state governments. This shall be first converted into bonds to be issued by discoms to participating lenders, duly backed by the state government’s guarantee.

The scheme is effective as soon as notified and will remain open till December 31, 2012 unless extended by the government. The state governments will also take-over the liability from discoms in the next 2-5 years by way of special securities and repayment and interest payment to be done by state governments till the date of takeover. After the notification of the debt restructuring package, the States would enact the legislation within 12 months from the date of circulation of model legislation to mandate compliance of the provisions of the financial restructuring package.

When asked about the issue of price pooling, Shankar said, “we are discussing with the Coal Ministry, let’s see what comes out of it.” Coal India Limited (CIL) and Central Electricity Authority (CEA) are jointly working on price pooling mechanism for domestic and international coal and will submit the report to Power Ministry for consideration. Planning Commission deputy chairman Montek Singh Ahluwalia had earlier pressed for pooling of coal as well as gas prices.

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