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Discoms shy away from bearing power infrastructure loss

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Reported by Chinmaya Dehury/Edited by Sandeep Sahu
Bhubaneswar, Oct 19:

Even as individuals, organisations and corporate houses are announcing generous contributions to the Chief Minister’s Relief Fund (CMRF) for relief, rehabilitation and reconstruction work in areas devastated by Cyclone Phailin and the floods that followed it, power distribution companies (discoms) have shown no inclination whatsoever to come out with funds for restoration of the badly damaged power infrastructure in the state, forget about contributing to the CMRF.

The state government has requested the Centre for financial assistance to restore the power infrastructure in the affected areas, which has suffered losses worth Rs 900 as per preliminary assessment. Southco, the power utility for the southern districts, which bore the brunt of the cyclone fury, alone suffered losses worth Rs 550 crore while the losses incurred by CESU, responsible for supply in the central districts, run into Rs 250 crores. Nesco, the power utility for the northern areas, and Odisha Power Transmission Corporation Limited (OPTCL) have been pegged at Rs 40 crore and Rs 55 crore respectively

“Why should the state government bear the loss alone? The discoms should also bear at least part of the loss and make arrangements to restore the power infrastructure. They are only concerned with the profit. When there is a loss, it has to be borne by the government. It is a case of ‘heads I win, tails you lose’,” said Ramesh Satpathy, noted trade union leader of power workers.

Pointing out that Reliance Infra, which owns three of the four discoms in the state, had spent a sizeable amount for restoration of power infrastructure in Mumbai after the deluge in the Maximum City in July 2005, Satpathy said there was no reason why the company should refuse to bear the loss in the state. “In any case, it is their responsibility to restore power after the power sector reforms,” he said.

But Reliance Infra has an altogether different take on the issue. It says it is for the Centre to bear the loss from natural calamity fund in case any natural disaster, even though the discoms have been entrusted with the maintenance of the power infrastructure.

“The discoms are under a public company in which Gridco owns 49% stake. We are only maintaining it. In case of flood or any natural calamities, the government will bear the cost for restructuring of power infrastructure ravaged in natural calamities,” AK Vora, chief executive of Central Service Office, the umbrella arm of the three discoms owned by Reliance Infra, told OST.

Asked how the company bore the losses during the Mumbai deluge, Vora said; “The two cases are completely different. “While the discoms in Bombay are completely owned by the company, the three discoms in Odisha are under a public company,” he pointed out.

While that may be true, observers of the power sector say part of the reason for the large scale devastation to power infrastructure during the cyclone this time is its poor maintenance, which is the sole responsibility of the discoms. In the absence of any spending by the disocms on strengthening existing Transmission & Distribution (T&D) infrastructure, including metering systems, has contributed to high AT&C losses.

In April1999, the distribution business of GRIDCO was privatised when GRIDCO disinvested 51% of its share of its equity holding in distribution companies to private investors with financial and technical capabilities. Nesco, Wesco and Southco were incorporated in 1997 under the Companies Act, 1956.

According to government figures, at least 54 EHT towers toppled over in the cyclone, mostly in the worst-hit Ganjam district, while 28 were partly damaged. Besides, 34,000 km of low tension lines and 3,700 km of high tension lines were severed.

The government has 2.4 lakh km line across the state, which is controlled by Cesu and other three power utilities managed by Reliance Wesco, Nesco and Southco.