Reform's on: Govt to reward model states

KOLKATA: Contrary to the belief that Union power minister Suresh Prabhu’s exit will derail power reforms, the Centre seems to be determined to keep them going. The power ministry has decided to bifurcate the Rs 3,500-crore budget for Accelerated Power Development and Reform Programme (APDRP).
Half of the APDRP fund, earmarked in the Union budget for ’02-03, will now be used for investment in ‘demonstration projects.’ Such projects will enable the utility to accumulate resources and build a model where a reform strategy for the entire utility can be tested.
The remaining 50% will be used to provide “substantial rewards� for states that are willing to go beyond ‘demonstration projects’ and undertake utility-wise reforms for performance improvement.
The incentives will be based on the reduction of the gap between the cost of supply and revenue realisation. Since the reward is performance based, which will be arrived at over a period, the disbursements from the incentive scheme too will be over a period of time.
The decision has been taken by the Centre on the basis of suggestions by the 16-member Deepak Parekh committee during its meeting with the Central Planning Commission some nine months ago.
“A percentage of the share from the investment will be scooped out every year and will be added to the incentive part proportionately to the growth of revenue generation within the system,� a senior member of the Parekh committee said.
The Parekh committee was set up by the Union ministry on March 27 to assist development of state-specific reform programmes for sustaining the financial viability of the power sector and to effectively harness the funds under the APDRP and other sources.
Meanwhile, the deadline for the first report of the Parekh committee, which was slated for submission by June 30 has been deferred till August 31.
“The report is being finalised and could not be finished in time because of conflicting opinions within the ministry,� the committee member said. The committee member also said that the vastness of the terms of reference might prevent the committee from even meeting the extended deadline.