Action plan mooted on power reforms

NEW DELHI MARCH 29. The expert committee headed by the Secretary (Power), Ashok Basu, today recommended a time-bound action plan for introduction of reforms in the energy distribution sector.

In its report on reforms in electricity distribution submitted to the Union Power Minister, Suresh Prabhu, the committee has clearly identified, on the basis of international and domestic experience of the States, three specific areas considered vital for making the action plan a success.

Noting the improvement in operations, it said steps to facilitate enhanced operational performance and increased accountability ought to be pursued immediately.

Secondly, while recognising that rural electrification involved supply of power with higher costs, the experts have recommended adoption of a customised approach for the rural segments, particularly in the context of lack of ability to pay and the requirement of the broader social-economic objectives.

"The rural electrification would have to be treated as part of the socio-economic development plans of the village and investments would need to be supported from the budget, preferably in the form of grants. Further, rural electrification would need to be managed by rural cooperatives or entrepreneurs approved by the local communities or through franchisees or panchayats," the committee said.

Referring to privatisation of distribution business identified as the third element included in the action plan, the committee said though it would not immediately resolve various problems within the sector, it was definitely expected to benefit the Government, the sector and the consumers at large in the long run.

However, there would be a need to carefully focus on the transition path and the strategy to be followed for optimising the benefits.

Pointing out that considerable preparatory work for creating the right climate needed to be done and that choice of an appropriate model and a suitable independent regulatory system should precede the privatisation of the distribution network, it said the strategy should effectively tackle key issues involving proper metering, distribution circle management and anti-theft legislation within six months.

In order to facilitate implementation of the action plan, the committee said the State Governments should appoint agencies for determining the base line data by deciding on incentives for loss reduction exceeding the agreed loss reduction levels and that the Centre should release a tariff policy.

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