Cash incentive to best reformed state utility soon: Shinde

New Delhi, June 13 (UNI) The Union Power Ministry is considering offering cash incentive from next year to states whose power utilities achieve highest performance rating.

Announcing this at a function here, Power Minister Sushilkumar Shinde said his Ministry was looking into the matter and would finalise the scheme soon. He did not elaborate on the prize amount to be given as incentive to state utilities that institute power reforms.

Earlier, Mr Shinde gave away the trophies to representatives of the three top ranking states -- Andhra Pradesh, Gujarat and Delhi -- based on the performance of their power utilities during 2005-06.

The annual rating exercise -- now in its fourth year of existence -- has become the basis to provide incentive from the APDRP funds, central assistance including budgetary assistance and support from Central PSU.

Encouraging the states to shape up, the Minister said since the awards had been set up three years ago, there had been considerable improvement. The Northeast states had started generating power and had installed capacity and now were clearly in the race.

At the instance of the Power Ministry, Power Finance Corporation Ltd (PFC) has mandated credit rating agencies Crisil and ICRA agencies to carry out the performance rating of the state power sector across all states.

This is part of the efforts by the ministry to give utmost importance to distribution reforms in the power sector with the objective of making it perform efficiently so that it makes a significant contribution to the country's economic growth.

Appreciating the efforts made by state power utilities, Power Secretary R V Shahi said they should not become complacent with their present status on implementation of reforms and reducing AT&C losses as much still needs to be done.

Noting that when the rating exercise was launched there were major doubts about its efficacy, Mr Shahi said after four attempts it had "vindicated itself as it was perceived to be having a considerable impact".

The exercise had brought in transparency and competition among states and was being looked forward to at the highest level from the Chief Ministers downwards.

Based on the feedback obtained from the ministry and the utilities, the parameters used for the rating exercise have undergone changes this year.

Two new parameters have been introduced to assess the ability of the sector to attain commercial viability on a stand-alone basis and the extent to which steps have been to attract fresh investments and accompanying benefits to consumers like lower tariff and better service standards.

Stringent negative marks have been introduced against several parameters such as timely filing of tariff orders, interface metering and implementation of key provisions of the Electricity Act, 2003.

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