Strong Sebs Seen Crucial To Success Of Ipps

The state electricity boards (SEBs) need to be strengthened in the interest of the independent power projects (IPPs), according to West Bengal power secretary S Barma. Most apprehensions regarding independent power projects would not have arisen if the state electricity boards were in robust financial health, Barma said at a seminar on risks in power projects organised by the Independent Power Producers of India in Calcutta yesterday.

IPPs have little option but to sell their output to SEBs, said the secretary. State electricity boards are expected to ensure the statutory return to the IPPs, but are themselves deep in the red. The first task therefore was to strengthen the SEBs and eliminate much of the risk for IPPs, he pointed out.

 

Former National Thermal Power Corporation chairman P S Bami said strengthening the SEBs was not easy under the present political set-up. The SEBs are asked to earn a minimum of 3 per cent return, but most of them are unable to do that, according to Bami. He pointed out that the state government controlled the SEB chiefly because of the subsidies extended to the board.

According to Barma, tariff on power supplied to the agriculture sector is very low and most of it is not collected at all.

The Common Minimum Programme for the power sector agreed upon by all the chief ministers last December has recognised the importance of increasing the financial strength of SEBs.

This, Barma said, should have been part of the liberalisation package for the power sector introduced six years ago. He pointed out that the success of private investment in power generation depended on the return on investment and the return could come only from financially viable SEBs.

Privatisation of the entire distribution was difficult since the private party, looking for profits, was likely to ignore rural areas because of their non-viability, said the power secretary.

Barma said West Bengal would soon merge the power station of Durgapur Projects Limited with the West Bengal Power Development Corporation. The corporation is the principal state-owned generating agency in the state.

The West Bengal SEB, which is in charge of transmission, will strengthen its network with a Rs 860 crore loan from the Overseas Economic Co-operation Fund of Japan.

Harry Dhaul of the Independent Power Producers of India said the Orissa model of SEB recast offered just a bare outline.

Various states had their own problems and the model could not suit all, he said.

Supporting Barmas views, Dhaul said IPPs could not function as islands and needed strong SEBs.