22. The importance of power in fuelling economic growth cannot be over emphasised. The total cost to the State Electricity Boards of implicit subsidies amounts to about Rs 36,000 crore this year. After accounting for cross subsidy and State subventions, actual commercial losses of all SEBs combined are estimated to be about Rs 24,000 crore. Hidden in these loss figures are extremely high T&D losses.

23 Although all of these losses are borne by SEBs and State Governments, I have to express my concern on this issue since this is a massive national loss and affects Central Government undertakings also. The total dues owed to Central Government utilities by SEBs and others now amount to over Rs 25,000 crore. If these resources were available, the country would have no difficulty in investing adequately in power sector expansion to the benefit of all. Theft of electricity must be stopped and economic tariffs levied.

24. The most vital element of the reform process is the restoration of financial viability of the State Electricity Boards (SEBs). On the basis of consensus that has progressively emerged in the National Development Council Resolution of 1992, the Common Minimum National Action Programme drawn up in 1996 and the Power Ministers’ Conference of February 2000, the Central Government is accelerating the programme of reforms in SEBs on the basis of specific milestones that are being built into MOUs entered into with State Governments. These MOUs include specific milestones such as:

l A time bound programme for installation of 100 per cent metering by December 2001.

l Energy audit at all levels.

l A specific programme for reduction and eventual elimination of power theft.

l Tariff determination by SERCs and compliance thereof.

l Commercialisation of distribution and

l SEB restructuring.

To demonstrate the importance of this task, the Prime Minister will hold a meeting of State Chief Ministers on March 3, 2001.

25. MOUs have already been entered into with 5 States and we expect more States to adopt the reform process. Accordingly, plan allocation to the Accelerated Power Development Programme (APDP) has been stepped up to Rs 1500 crore next year from a level of Rs 1000 crore this year. Priority under APDP would be given to those states that undertake such reform. The key to restoration of financial viability is reform of distribution. Assistance from the Fiscal Reform Incentive Fund recommended by the 11th Finance Commission would also, inter-alia, be linked to the achievement of power reforms. The reforming States would also receive support from the Central Government in form of preferential allocation of power to SEBs from CPSUs, additional investment by CPSUs in generation and transmission, and preferential allocation of external aid.

26. In order to help accelerate the reform process in the power sector and to unify all existing central legislations in the sector, my colleague the Minister for Power will introduce the Electricity Bill 2001 within this session.

27. The Plan outlay for central sector power utilities is being raised from Rs 9,194 crore this year to Rs 10,030 crore for 2001-02. This demonstrates the commitment of the Central Government to accelerate public sector power investment along with power sector reforms.