Orissa yet to decide on investing in power PROVIDERs

With the private distribution companies in the state incurring a cumulative loss of about Rs 2740 crore by the end of 2008-09, the Orissa government is yet to take a decision on the suggestion of Orissa Electricity Regulatory Commission (OERC) to invest about Rs 900 crore for improving the quality of power in the state.

Since the state government holds 49 percent stake in all the four power distribution companies in the state and gets about Rs 500 crore as energy duty every year, the Commission had requested it to invest in system upgradation so that the private distribution companies would be forced to invest proportionately.

“The government should play the role of a facilitator to enable the power distribution companies to invest. Since all the assets of the power distcoms are hypothecated to Gridco, they are unable to raise loans. Besides, their flow of income stream is not expanding as the retail tariff has not increased in last 8-9 years. So we suggested the state government to invest about Rs 900 crore through state owned Gridco”, an official of the OERC said.

It may be noted, every state government is providing transitional support to the power distribution companies in their respective states. While the Delhi government had provided Rs 3450 crore as transitional support at the time of privatisation, the Gujarat government recently provided Rs 1294 crore to its power distribution company to install three phase lines.

Sources said, the Commission also suggested that a monitoring committee under the chairmanship of the state energy secretary may be constituted to work out the details of the work to be taken up with state government’s assistance.

With the tariff not being raised for last 8-9 years, the flow of income for the power distribution companies has stagnated resulting in failure to bring down transmission and distribution (T&D) loss significantly. The T&D loss was 37.5 percent and the aggregate technical and commercial loss was 41,31 percent by the end of 2008-09.

The state government had sought Rs 5000 crore grant from the Thirteenth Finance Commission (TFC) which included Rs 3200 crore for upgradation of the distribution system. TFC is reported to have given a patient hearing to the demands of the state for grant of about Rs 1000 crore, but it is not known whether this grant will materialise.

In this backdrop, the chief minister Naveen Patnaik is likely to take a meeting on the fiscal health of the power distribution companies and the Orissa Power Transmission Corporation Ltd (OPTCL) soon.