23.05.2015.....
Merging of electricity companies....
Gujarat government may merge 4 power distribution companies
Monday, 22 April
2013 - 11:25am IST | Place: Gandhinagar | Agency: dna
They were created
when GEB was unbundled in 2005 as part of restructuring of electricity sector.
·
Eight years after the Gujarat Electricity
Board (GEB) was un-bundled into separate holding, generation, transmission and
distribution companies, the stategovernment is now thinking
of merging the four power distribution companies into one entity.
In 2005, the GEB was un-bundled into separate entities under the
Electricity Act of 2003, as part of the restructuring of the electricity sector
to improve efficiency inmanagement and delivery of
services to consumers.
The exercise led to the
creation of Gujarat Urja Vikas Nigam Limited (GUVNL), which is the holding
company; Gujarat State Electricity Corporation Limited (GSECL) for generation
business; and Gujarat Energy Transmission
Corporation Limited (GETCO) for electricity transmission.
Dakshin Gujarat Vij Company Limited (DGVCL), Madhya Gujarat Vij Company
Limited (MGVCL), Uttar Gujarat Vij Company Limited (UGVCL), and Paschim Gujarat
Vij Company Limited (PGVCL) were formed for distributing power in the south,
central, north and Saurashtra regions of the state, respectively.
However, just eight years down the line, the government is now
contemplating merging back the four distribution companies.
“The proposal to merge the discoms is under consideration. No decision
has been taken yet,” DJ Pandian, principal secretary, energy &
petrochemicals department, told dna.
A source said that the entity proposed to be formed by merging the four
distribution companies is likely to be named Gujarat Vij Vitran Nigam Limited
(GVVNL).
A senior official of one of the distribution companies said that
individual discoms are facing issues such as load management and maintaining
uniform tariff. The discoms do not have enough negotiating power and face
problems in fulfilling financial obligations. There is a feeling that all this
can be avoided by forming a single company.
“There are also operational issues in implementation of
availability-based tariff (ABT), which has financial implications when one
discom is under-drawing power and another is over-drawing. In the case of a
single discom, demand can be met in an optimal manner,” the official said.
Tax implication is another key reason behind the proposal.
“There will be huge tax liabilities as transactions between GUVNL and
discoms can now be covered under the ambit of specified domestic transaction
under Transfer Pricing Regulation scenario. Part of this can be avoided in the
case of a single company,” said an official.
The GUVNL has proposed keeping intact the existing organizational
structure after re-bundling of the discoms.
“The entity formed by re-bundling the discoms can be headed by an MD.
The discoms can work under a single board as zonal offices. The heads of zonal
offices will be MDs or CEOs of the respective existing discom,” explained a
senior GUVNL official.
There was strong opposition from GEB employees when the proposal to
un-bundle the board was mooted by the government back then. However, employees
are believed to be in favour of the latest move.
A senior official said that un-bundling of GEB was primarily aimed at
reducing its mounting losses, curbing rampant power theft and providing
functional autonomy. It was also felt that the move would help in inculcating
greater competitiveness among the companies, he said.
The purpose has more or less been achieved as the four distribution
companies are among the best in the country. The Gujarat discoms were the only
ones in the country to have received the top rating of A+ in an exercise
commissioned by the power ministry.
An industry observer said that the purpose of carving out separate
discoms had been partly achieved, but operating efficiency has come down due to
increased employee burden at the corporate level.
“Previously, a few people were managing affairs at the state-level. Now,
four different companies, each of them having their own administrative staff,
are doing it,” he said.
