Power sector initiatives: Deja vu?
In contemporary parlance, SEBs remain deeply subprime. Several initiatives in the power sector are supposedly on the anvil. First, a Rs 100,000 crore National Electricity Fund (NEF) has been reportedly proposed by a committee. Ostensibly the objective is to provide loans to those state electricity boards and, presumably, their successor unbundled entities comprising transmission and distribution companies that cannot otherwise borrow from normal channels, like banks. The money will be borrowed for the benefit of state electricity boards (SEBs) by government-owned specialised financial intermediaries, specifically, Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) with the help of fiscal sops and concessions (and implicitly government backing given the origins of these entities). Second, the possible extension of the tax holiday for new power projects (including mega ones) from 2010 to 2017 since projects that have been awarded recently are unlikely to begin operations on time to benefit within the current deadline. Third, a revamped Accelerated Power Development and Reform Programme (APDRP) to induce reduction in aggregate technical and commercial (ATC) losses may be introduced, whereby states are financially rewarded if losses decline to a target level, say, 15 per cent. The serious "new' money is the NEF, if it comes about. The proposed initiatives are hardly original, they are devoid of conviction (since we are close to elections), and they are largely an admission of failure. Since the beginning of the decade, this will be the second instance of a major central government financial intervention in the electricity sector. It may be recalled that in 2001, unpaid dues (including interest and penalties) of SEBs to central public sector units (CPSUs) and Indian Railways had reached Rs 41,500 crore (about 2 per cent of 2000/01 GDP); the sector was on the verge of a default crisis, which would have taken CPSUs down, financially. The way out, in a manner of speaking, entailed securitising Rs 35,000 crore through bonds