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Memorandum of Understanding Between Ministry of Power, Government of India And The Government of Assam

 

6-3-2001

THIS MEMORANDUM OF UNDERSTANDING is made between Ministry of Power, Government of India, and Government of Assam to affirm the joint commitment of the two parties to reform the power sector in Assam State, and to set out reform measures, which Assam will implement, and the support that the Government of India will provide.

I. PREAMBLE:
 

1. Assam is committed to reforming its power sector in order to,

a) to provide good quality power to all the people of Assam.

b) achieve commercial viability in the power sector so that the sector can finance its investment needs and is not dependent on budgetary subsidies.

 

2. The Govt. of Assam has initiated reforms in its power sector. It has already taken the following notable steps in this direction: -

 

a) Reform and Restructuring study got conducted through consultants.

 

b) A Committee has been set up to recommend names for appointment of member to SERC. The Government has decided that to begin with it will have a single member ERC in the state, which may subsequently be converted into 3 members commission.

 

c) The Government has come out with a policy paper envisaging the shape of reform and restructuring as under: -

 

- Establishment of Assam Power Corporation to carry out generation and transmission functions of present ASEB. Subsequently generation will be separated into one or more companies.

 

- To set up two distribution companies. Selective Urban areas may be leased out to private entrepreneurs.

 

- Assam Rural Electrification Corporation to be set up for taking up capital investment work in rural areas from plan funds.

 

3. This Memorandum of Understanding between the Ministry of Power, GOI and the Government of Assam sets out the steps that the Government of Assam will undertake in a time bound manner to further the process of reform and restructuring and the support which the GOI would give to the Govt. of Assam.

 

II. REFORM PROGRAMME OF ASSAM

a) Govt. of Assam would appoint Chairman/member SERC by 30th April 2001.

 

b) Operationalise SERC by 30th June 2001. State Government would assign the SERC with the responsibility of tariff fixation and recommend to the Government of India omission of Sec 43 A(2) of the Electricity (Supply) Act, 1948.

 

c) State Government would give full support to the State Electricity Regulatory Commission to discharge its statutory responsibilities.

 

d) Energy Audit will be undertaken at all levels in order to reduce system losses. This would be done in a time bound manner with the following milestones :

 

- Installation of metering at all 11 KV feeders by 31.7.2001

- 100% metering of all consumers by 31st December, 2001

- On line billing at all major towns through computerization by 31st March 2002.

e) The Government of Assam shall also take measures including rationalization of existing manpower, restricting recruitment to need based only to reduce the cost of supply in the State which is one of the highest in the country.

 

f) Levels of ASEB’s receivables to be brought down to 60 days billing by March 2002.

 

g) Assam will maintain grid discipline, comply with grid code and carry out the directions of Regional Load Dispatch Centre.

 

h) Government of Assam will secure outstanding dues of CPSUs as per scheme approved by Government of India after due diligence if the cash flow of the State finances so permits.

 

III. SUPPORT FROM GOVERNMENT OF INDIA

 

To support reform program of Govt. of Assam, Ministry of Power would extend the following support:

 

a) Supply of additional power out of the unallocated surplus central pool.

 

b) Financial support through APDP for execution of schemes of strengthening of sub transmission and distribution in identified circles in the first phase through short term, medium and long term measures to reduce T&D losses to 20% and make these model circles.

 

c) Financial support through APDP/PFC for R&M of thermal Plants.

 

d) Taking note of the need for structural adjustment financing for successful completion of reforms and restructuring of State Electricity Board as and when taken up by Assam Government, Ministry of Power would fully assist Assam in raising funds for this purpose from financial institutions and other sources.

 

e) To strengthen and improve the transmission network for supply of additional power to Assam with the help of PGCIL with efforts to keep wheeling charges at minimum possible level.

 

f) Technical assistance would be provided for studies for system loss reduction programme, which would include appropriate technology including a high voltage distribution system in a phased manner.

 

g) The Ministry of Power would extend help to Assam to implement the resolution of the Chief Ministers/Power Ministers Conference held on 3-3-2001regarding 100% electrification of villages and hamlets.

 

h) Govt. of India will assist Assam in exploiting its hydro potential through development of projects by:

 

i) State sector

ii) Joint venture of Govt. of Assam and CPSUs.

 

III .IMPLEMENTATION:

• Implementation of the MOU would be monitored every three months. The support from the GOI would be contingent upon achievement of milestones/implementation of commitments made above by Govt. of Assam.

 

• 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, the 26th March, 2001, at New Delhi.

 

For and on behalf of For and on behalf of

Government of Assam Government of India

(Sumeet Jerath) (Ajay Shankar)

Commissioner & Secretary Joint Secretary, Ministry of Government of Assam. Power, Government of India