The Planning Commission has set up a committee headed by Mr B K Chaturvedi to help restore the financial health of the utilities, to revive the country’s power distribution sector, which is reeling under huge losses,
The Committee also comprises representatives from the Ministry of Finance, the Reserve Bank of India and officials from the state governments.
“The committee would suggest measures to improve the financial health of power distribution utilities,” Mr Chaturvedi said.
It would prepare a report in the next 6 months, before the start of the 12th Five Year Plan Period (2012—17), so that the suggestions can be incorporated in it.
“We will ensure that there are no defaults on payments...before the start of the 12th plan, we would put the mechanism in place,” Mr Chaturvedi said.
The Finance Minister, Mr Pranab Mukherjee, at the National Development Council meeting last week, had asked the states to raise electricity charges to improve the financial health of power distribution companies.
They are facing difficulty in raising fund from banks on account of poor balance sheets.
Some of the distribution firms have not raised tariffs for 10 years and their total losses are estimated to be Rs 70,000 crore.
Meanwhile, the Ministry of Power has proposed that the state governments would consider converting loans due from them to the distribution utilities as state government equity to ensure capital infusion and improvement in net worth of the utility.
The state governments would have to ensure that the accounts of the utilities are audited up to the year 2009—10 and the accounts of a financial year are audited by September, of the next financial year (2010—11).
Power Ministry has set a target of adding 1,00,000 MW of electricity during the 12th plan period.