Government moots stringent evaluation for power discoms

Assessment criteria include around 100 incentive-linked parameters, regular monitoring by power ministry

The National Democratic Alliance (NDA) government is designing a monitoring framework for power distribution companies (discoms) with around 100 parameters.

The Union ministries of power and finance along with the state governments and private agencies are designing strict evaluation criteria for state-owned discoms that sign up for the scheme.

Last month, the Cabinet had cleared Ujjwal Discom Assurance Yojana (UDAY) to revive the stressed power distribution sector and provide relief to lenders. Andhra Pradesh, Jharkhand, Punjab, Jammu & Kashmir, Himachal Pradesh, Uttarakhand and Rajasthan have in principle agreed to subscribe to UDAY.

The monitoring committee will have representation from various agencies of the power ministry - Central Electricity Authority, Power Finance Corporation (PFC), Rural Electrification Corporation, PowerGrid and Central Elect-ricity Regulatory Commission.

"These departments would monitor their area of operations such as technical efficiency, financial improvement, progress of infrastructure construction and others," said a senior official in the power ministry.

According to officials, this was needed because the problems are so many that one agency can't handle it alone. "Even aggregate technical & commercial (AT&C) losses have several variables involving handholding by different departments. Every micro aspect is being noted, which would be improved accordingly," said the power ministry official.

Government officials said some evaluation parameters would have an incentive attached to it, such as additional grants from central government's programmes, more funding as a reward for better performance, subsidies in certain programmes such as sale of LED and other equipment, etc.

The parameters would be simple doable things, which could be evaluated in tangible terms. The parameters and the performance of the discoms would be made public.

Officials said to involve transparency in the whole functioning, the central government is also likely to propose annual ranking or a report card of discoms.

PFC is already doing an annual ranking of the discoms, which would now be made more stringent by involving monthly updates and quarterly evaluation, said a PFC executive. He said the ideas were at the discussions stage. The 'report card' of the discoms would also mention their involvement and performance in the central schemes such as Deendayal Upadhyaya Gram Jyoti Yojana, Integrated Power Development Scheme, and energy efficiency programmes such as LED.

"The power ministry departments, which are designated for these programmes would be the monitoring bodies for their implementation with regards to the UDAY reform plan as well," said the official.

The finance ministry would also work closely to monitor the financial position of the discoms. The first step of UDAY is taking over discoms' debt by the respective state government. The discoms collectively owe Rs 4.3 lakh crore to financial institutions. The plan, designed by the Centre and open to all states, would be implemented through a memorandum of agreement with the state governments and the respective discoms.

States are suggested to take over 75 per cent of discom debt as on September 30, 2015 over two years - 50 per cent in 2015-16 and 25 per cent in 2016-17. The state will issue bonds from the same. For the next two financial years, the Centre will not include the debt taken over by the states in the calculation of their fiscal deficit. The Union power ministry said except two or three states, none would breach their fiscal deficit limits after taking over the debt.

"The government is keen to ensure that states take up implementation of the UDAY scheme in right earnest. Apart from the efforts to onboard states to the UDAY scheme and the monthly meetings ensuring continuous dialogue, we understand the government is keen to utilise all the investment under R-APDRP (Restructured Accelerated Power Development and Reforms Programme) to good use and put a robust monitoring system to ensure competitive federalism amongst utilities," said Sambitosh Mohapatra, partner (power & utilities) at PwC India.
FLIPPING THE SWITCH ON BRIGHT IDEAS

• Strict monitoring for discoms, monthly meetings, quarterly updates and annual reviews
• More than 100 parameters for monitoring and evaluating discoms
• Technical efficiency, financial strength, infra construction, among others, to be broad points
• Departments of power and finance along with private agencies to design guiding framework
• Monitoring process, results and achievements to be made public