GUWAHATI, Oct 16 - In line with the policy of the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) Government at the Centre, the Assam Government has initiated a move to privatise Assam Power Distribution Company Ltd (APDCL).
Going by the terms proposed by the Union Power Ministry for the purpose, it seems that they are formulated to copiously benefit the private parties taking over the APDCL. Some of the terms proposed for the purpose are also violative of the legal provisions.
The APDCL authorities have constituted a nine-member committee with the Chief General Manager (Commercial and EE) as the Member Convenor. This committee is to �finalise views/suggestions/comments covering all aspects of the document (for privatisation) and submit latest by October 20, 2020 for placing before the higher authorities�.
The APDCL authorities have also shared the Centre�s �draft Standard Bidding Documents (SBDs) for privatisation of the distribution licensees�, along with the APDCL management�s �draft views thereon� for needful perusal of all concerned through an office order issued on October 13, 2020.
It is argued that APDCL is sought to be privatised to bring about solutions to the problems plaguing it. One of the major problems is the cost overrun, which leads to significant higher generation tariff and subsequent higher supply cost, affecting the �overall economic growth of the State�. But, the SBDs state in one of the provisions, ��in the specific cases where there is a significant gap between ARR (Annual Recurring Revenue) and ACOS (Average Cost of Supply), PPAs (Power Purchase Agreements) may be retained in a State/UT (Union Territory) Government entity to structure a subsidised bulk power purchase cost for the successor entity for making it an independently financially viable entity, for a specified period.�
Another term of the SBDs says, �Wherever required, the concerned State/UT Government may provide suitable transition support to the successor entity for a specified period of say 5 or 7 years.�
The APDCL observes, �It needs no mention that relaxation as proposed will put perpetual financial burden to State exchequer. If similar support is provided to APDCL, the operational efficiency will automatically shoot to best utilities in business. There shall not be any requirement left to go for private participation.�
A different SBDs term states, �The DISCOM (Distribution Company) shall be provided an incentive of ten percent (10%) on recovery of past arrears from live consumers and twenty per cent (20%) on recovery of past arrears from permanently disconnected consumers. Such incentive shall be allowed to be retained by the DISCOM in full and shall not be adjusted in the ARR/tariff approval of the DISCOM.�
Here, the APDCL said, �Additional incentive on arrear collection and retaining of the same in entirely will provide the transferor DISCOM undue windfall profits at the cost of ordinary consumers. It is to be noted that efficiency gain on such arrear collections in the form of reduced AT&C (Aggregated technical and commercial) losses is already made permissible. As such, double benefit for same amount will lead to undue enrichment of the transferor DISCOM at early years of contract. There is every possibility that the transferor DISCOM may opt out of the contract immediately after getting the windfall gains.�
One of the SBD terms is for a bulk power supply agreement between the supplier and the transferor DISCOM. Here, the APDCL view is � �such an agreement is in contravention to statutory provisions as of date�. Moreover, the proposition of sale of power to a DISCOM at a tariff linked with �buyer�s paying capability� is not covered in the governing statues. The new proposition is an entirely new dimension to tariff fixation.
In case the same principle is followed for all Central Power Sector Enterprise Gencos supplying power to different States with varying purchasing power, efficiency of State-run DISCOMs of economically backward states will automatically get improved, APDCL observes.