I. PREAMBLE:

1. Jharkhand is committed to providing good quality uninterrupted power supply to all its people at affordable rates.

2. It is also committed to attaining commercial viability in the power sector so that the necessary investment needs of the sector can be met to cater to increasing demand for accelerating economic growth in Jharkhand.

3. This memorandum of understanding is made between the Ministry of Power, Govt. of India and the Govt. of Jharkhand to affirm the joint commitment of the two parties to reform the power sector in Jharkhand for the fulfillment of the objectives indicated above. This memorandum sets out the reform measures which Jharkhand will undertake and the support Govt. of India will provide.

1. Complete provision of supply to all villages by the year 2006.

2. The State Electricity Board will be working on profit centre concept. Independent profit centres will be created by March 2002.

3. Jharkhand will ensure that current operations on distribution reach a break even by 31st March, 2003 and achieve positive returns thereafter.

4. Undertake energy audit at all levels to reduce system losses to bring them to the level of 18% by 2003. This is to be done in time bound manner with following milestones:

• Installation of meters at all its 11K.V. feeders by December, 2001
• Energy audit at 11 KV level would be operational by March, 2002. On completion of energy audit, assessment of real T&D losses shall be made. A time bound programme for reduction of T&D losses shall be drawn up and implemented.
• 100% metering of all consumers by March, 2002.

5. Jharkhand will develop an effective distribution Management Information System.

6. The decision of the Chief Ministers/Power Ministers Conference to have a minimum agricultural tariff of 50 paise per unit will be implemented immediately.

7. Jharkhand has formulated a programme for critical transmission links and augmentation of transformation capacity in the system for better power disposal and utilization. Schemes to install capacitors in sub-transmission and distribution for overall improvement in distribution sectors will be implemented.

8. Jharkhand will undertake computerized billing in the major towns by March, 2002. This will make energy audit more effective.

9. Jharkhand will constitute an independent State Electricity Regulatory Commission. It would be made functional by September, 2001. Tariff petitions will be filed by November, 2001. Tariff orders issued by SERC will be implemented fully unless stayed or set aside by court orders.

10. Jharkhand will pay timely subsidies required as per order of the Government of Jharkhand on the tariff fixed by SERC.

11. Jharkhand will undertake measures to improve PLF of its Thermal generating units and bring their efficiency to the National average by March, 2003.

12. Jharkhand will maintain Grid discipline, comply with the Grid Code and Availability Based Tariff when it come in force and carry out the directions of Regional Load Despatch Centre.

13. Jharkhand will securitise outstanding dues of CPSUs as per scheme approved by the Government of India. After securitisation, it will ensure that outstanding to CPSUs does not exceed two months billing.

1. The Govt. of India will provide funds from APDP for:

a) Renovation and modernization and uprating of thermal and hydro electric units like PTPS, TTPS, Chandil etc.

b) Improvement of sub-transmission and distribution in three identified circles, with a view to bring down T&D losses to the level of 18%, by March, 2002.

2. The Government of India will extend help to Jharkhand in its efforts to fund its rural electrification programme.

3. Additional allocation of power to Jharkhand from central generating stations. The additional allocation will be linked to securitisation and record of timely payments of dues to CPSUs.

4. The Powergrid Corporation will help Jharkhand in execution of critical transmission links for better power dispersal and utilisation.

5. The Power Finance Corporation would consider extending finance to Jharkhand for meeting the financial needs of the State power sector in relaxation of normal conditionalities relating to exposure limit, ROR and DSCR.

6. The Power Finance Corporation, Rural Electrification Corporation will be willing to fund the programme of 100% metering in Jharkhand at concessional rates.

Himachal Pradesh will prepare an action plan for implementation of the MOU,

which would be monitored every three months.

This Memorandum of Understanding will be for a period of five years, and will be subject to review annually.

Through this Memorandum of Understanding, both parties affirm their commitment to fulfill the reform activities and achieve the objectives mutually agreed upon in this Memorandum.

Signed this day of 30th April, 2001 at New Delhi