Tamil Nadu ranks 10th in power sector performance

CHENNAI APRIL 9. Tamil Nadu, considered to possess a better-managed power utility, ranks only 10th in a nationwide study on performance of the electricity sector.

Commissioned by the Power Finance Corporation (PFC) at the instance of the Union Power Ministry, the study has given Tamil Nadu just 47.5 marks (out of 100), though it has recognised the State's strong points. Totally, 26 States have been studied.

Many northern and western states — Haryana, Rajasthan, Maharashtra, Delhi, Gujarat and Himachal Pradesh — are ahead of Tamil Nadu. The top two slots have been won by Andhra Pradesh and Karnataka, which have earned 71.5 and 68 marks, according to information available on the ministry web site.

The study report was prepared in January on the basis of information available till August 2002. The study was actually carried out by the independent rating agencies, CRISIL and ICRA.

In the wake of the reform process initiated in various States, the need has arisen to assess their performance objectively and scientifically, using parameters which adequately reflect the reform agenda and the actual implementation in achieving a commercial basis of operation. Besides, as the Centre is giving incentives to the States under the Accelerated Power Development and Reform Programme (APDRP), it has to be ensured whether the States conform to the reform agenda.

The report says the Ministry/PFC can use such a performance scoring across the States for preferential allocation of APDRP funds or allocation of power to deficit States from the Central pool.

Internal and external factors influencing operations of the Electricity Boards /utilities have been taken into account. The internal factors are assigned 60 marks and the external factors 40.

Poor marks for external factors

In Tamil Nadu scenario, the external factors, which refer to the track record of the Government and the State Electricity Regulatory Commission, have got only 6.5 marks and the internal factors (pertaining to generation, transmission and distribution, and financial risk), 41.

But this report was prepared before the announcement of power tariff revision in March. Even the authors acknowledge that the tariff filing process had begun. "We expect to see a significant improvement (in the performance scoring) once the timely and rational tariff order is issued and the SERC pushes the State into formalising payments on the subsidy front", say the consultants.

Late in reforms

Tamil Nadu began "relatively late" in the reforms process, says the report. The process will gather momentum with the SERC having been made functional and the launch of energy accounting studies.

As for the positive features, low transformer breakdown rates, good revenue collections and success in efforts at replacing defective or low accuracy meters have been mentioned. Besides, the TNEB has been commended for being timely in servicing its debt and in preparation of annual accounts.

Call for White Paper

On the flip-side, the State Government has not been providing requisite financial support to the power utility.

The study suggests that a White Paper or formal action plan for reforms be prepared by the Government as it would provide a clear guideline and allow for measuring quantifiable progress.

Senior officials in the Government and the TNEB, however, say they have not received the report.

An SERC spokesman says the State's marks will go up if the tariff revision order is taken into account, as it has provided for three per cent returns, not allowing a regulatory asset to be carried forward and without making the Government pay the burden of subsidy.