THIS MEMORANDUM OF UNDERSTANDING is made between Ministry of Power, Government of India, and Government of HARYANA to affirm the continued joint commitment of the two parties to reform the power sector in HARYANA State, and to carry out the reform measures, which HARYANA will implement, and the support that the Government of India will provide.
1. Haryana is committed to reforming its power sector in order to,
a) provide sufficient reliable and good quality power to all the people of Haryana;
b) achieve commercial viability in the power sector so that the sector can finance its own growth.
2. In order to attain the above objective, Haryana has already undertaken the following steps:
a) It has passed its own Electricity Reforms Act in 1997, which is being implemented in letter & spirit.
b) It has unbundled the State Electricity Board into four independent Power Corporations – The Haryana Power Generation Corporation, Haryana Vidyut Prasaran Nigam, Uttari Haryana Bijli Vitran Nigam, Dakshini Haryana Bijli Vitran Nigam.
c) It has established the State Electricity Regulatory Commission.
d) The State Electricity Regulatory Commission is fully functional and has passed its first tariff order, which is being implemented by the State Government and Power Utilities.
e) Haryana is taking effective steps to bring about improvement in the management of distribution and improvement of revenue collection.
This Memorandum of Understanding between Ministry of Power, Government of India and the Government of Haryana records the steps that the Government of Haryana will take in a time bound manner to further the process of reform and restructuring and the support Government of India would give to Government of Haryana.
II. REFORM PROGRAMME OF HARYANA
3. Haryana would be taking the following measures :
a) T&D losses, which have been set at 40.76% by the Regulatory Commission, are proposed to be brought down to 20% by 2006 by reducing T&D losses by 5% per year.
b) 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 31.3.2001
- 100% metering of all consumers by 31st December, 2001
- Computerised billing for effective energy audit at all major towns by 31st March 2002.
- Formation of distinct distribution profit centers at Divisional level and preparation of separate commercial accounts/shadow Balance Sheets for such centers from 31.3.2002.
c) Take steps towards achieving commercial viability in distribution by such further measures/restructuring as may be required.
4. Haryana will maintain grid discipline, comply with grid code and carry out the directions of Regional Load Despatch Centre.
5. The Government of Haryana will ensure timely payment of subsidies required in pursuance of GoH’s orders on the tariff determined by the HERC.
6. Government of Haryana will securitise outstanding dues of CPSUs as per scheme approved by Government of India. After the securitisation Government of Haryana will ensure that CPSU outstanding does not cross the limit of 2 months’ billing.
III. SUPPORT FROM GOVERNMENT OF INDIA
7. To support reform programme of Govt. of Haryana, Ministry of Power would extend the following support :
a) Government of India will support through APDP execution of schemes of strengthening of sub transmission and distribution in four identified circles in the first phase through short term, medium and long term measures to reduce T&D losses to 18% and make these model circles.
b) Government of India will extend support to Government of Haryana through the mechanism of APDP/PFC to undertake Renovation and Modernisation of Thermal Plants.
c) Government of India would try to provide additional power to Haryana from the unallocated share of power at the disposal of the Centre from the month of April, 2001 onwards.
d) The Faridabad Gas Based Thermal Power Station Stage II (436 MW) would be taken up for early execution and commissioning by NTPC. Maximum power from this Station would be provided to Haryana as per their requirement if Haryana demonstrates its capacity to fully pay for the power it purchases from NTPC.
e) Ministry of Power will support execution of one phase of Yamuna Nagar Thermal (Gas / LNG based) Power Project (500 MW). NTPC would consider taking up the project immediately after feasibility is established.
f) Government of India will extend support for the successful execution of Hissar Thermal Power Project (Gas/Coal) (500 MW) with the support of PFC.
g) Government of India shall use its good offices for facilitating the agreements for purchase of Hydel Power from other States by Haryana.
h) Government of India shall extend support to Haryana in execution of critical Transmission Projects in the State by PGCIL/PFC including the 220 KV sub station at Gurgaon.
i) In recognition of Haryana being a reforming State, Power Finance Corporation would be prepared to finance its investment needs in relaxation of normal conditionalities relating to exposure limit, ROR and DSCR.
j) Taking note of the need for structural adjustment financing including that for working capital for successful completion of reforms, Ministry of Power would fully assist Haryana in raising funds for this purpose from financial institutions and other sources.
Signed this day the 13th February, 2001 at 5.45 p.m.