Govt mulls institutional finance for SEBs

in an attempt to shore up the finances of the ailing sebs the government is now looking at an institutional financing mechanism to restructure them and help them overcome the financial crunch. in fact, there is a new expert group headed by n k singh which is fine-tuning the seb reforms roadmap. the key issue is how to organise the transition finance, which is money required for one-time settlement of dues and capital restructuring so that sebs can be financially viable. most sebs today are in the red with most of them having incurred huge loses on account of faulty distribution lines, heavy thefts and low revenue collections. the central government decided in march this year that a model will be developed for a one-time settlement of the dues. but, apart from the securitisation route which was accepted by the state governments, it was felt by the government that some capital restructuring needs to be carried out. while budgetary support alone can't back the huge transitional finance requirement, the government is looking at evolving a change in the nature of the accelerated power development programme by benchmarking it to performance-linked parameters. it is proposed that the transition of accelerated power development programmewould be from an investment programme to a financing mechanism to push reforms. the modification of the accelerated power development programmewould work essentially as a carrot-and-stick approach. the plan is that funds would be allocated to states on the normal central assistance formula. but, the catch is that access to these funds would not be automatic but linked to measurable targets. the need for a relook at the montek singh ahluwalia committee formula has arisen with the power ministry seeking clarifications on the modus operandi of seb restructuring. the bone of contention is that there can't be a blanket approach to resolve the problems of sebs. each state has to have a specific approach towards solving the crisis as the parameters in which they operate are different. for instance, the user profile of electricity differs from state to state and so also the problems plaguing the state electricity boards. apart from the accelerated power development programme window, the onus of getting the state electricity boardsout of the red lies on states. however, the bonus is that states can access funds from multilateral agencies to go in for reforms-oriented plans. the centre is also exploring the option of enhancing funds access from these agencies.

Govt mulls institutional finance for SEBs

IN AN attempt to shore up the finances of the ailing SEBs the government is now looking at an institutional financing mechanism to restructure them and help them overcome the financial crunch. In fact, there is a new expert group headed by N K Sin...

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