Annexure – II

Speech of the Hon’ble Minister, Finance, on the occasion of inauguration the Workshop
 on “Standard of Performance and Consumers Satisfaction” in the Power Sector
 to be held on 22.09.2007 at Hotel Swosti Plaza, Bhubaneswar.

Hon’ble Chief Minister, Hon’ble Minister of Energy, IT and Culture, Chief Secretary, Development Commissioner, Hon’ble, Chairperson and Members of Orissa Electricity Regulatory Commission, Senior govt. officers present, representative of Consumer Forums, Distribution Licensees, representatives of local bodies, Non-govt. organizations, representative of print and electronic media, all invitees and Ladies and gentlemen.

2. At the outset, I thank OERC and its officers for organizing this workshop at the critical juncture of the restructuring of the state finances. I want to point out here that fiscal restructuring being undertaken by the state govt. includes public sector reforms, power sector reforms and administrative reforms including the improving the delivery of services in different sectors. It is based on inclusive growth strategy.

3. In the past the finances of the state was characterized by low revenue growth, high revenue expenditure, unsustainable debt burden, all leading to large revenue and fiscal deficit and resulting fiscal stress had limited the ability of the State to allocate adequate resources for development. During last 7 years, the state govt. have taken a number of fiscal reform measures which include revenue enhancing, expenditure nationalisation measures and debt restructuring. As a result, there is now more fiscal space for undertaking development. The World Bank has appreciated our positive transformations.

However, in this connection I must add that there is no room for complacencies. We must march ahead. I must put a word of caution here that though the revenue deficit has been wiped out and state has got a revenue surplus during 2005-06 and 2006-07, the state has not yet come out completely from the fiscal stress. Debt GSDP ratio though has reduced from 55.4% in 2002-03 to around 45% in 2006-07, this is quite high in view of the sustainable level of 28% recommended by the 12th Finance Commission. Similarly, the ratio of interest payment to revenue receipt has been reduced from 40.22% in 2001-02 to about 19% which is still higher than the sustainable level of 15% recommended by the 12th Finance Commission. Further, the ratio of salary expenditure as percentage of revenue expenditure net of interest payment and pension payment though has reduced from 66.5% in 2000-01 to about 50% in 2006-07, it is still higher than the desirable level of 35% recommended by 12th Finance Commission. Thus, in the fiscal front though we have made a good beginning, the ultimate goal is yet to be reached. There is a continuous move for achieving fiscal sustainability, with kind overall guidance of the Hon’ble Chief Minister and co-operation of different stakeholders of the society.

4. Sustainable fiscal stability would be possible in the state if there is turn around of the power sector. I must clarify here that power sector restructuring should not be misconstrued as privatization. It requires demystification, aggressive education and creation of a strong constituency/forum to preserve, promote and develop the essence of the restructuring. Hence, the restructuring is a necessity, but not a sufficient condition for turn around of the power sector. It is important to note that restructuring is only the beginning and not the end of the process. It must be accompanied by continuous complementary efforts to enhance efficiency in the sector and improve quality of service to consumers.

5. Strong and sustainable political support during all phases of the restructuring is the key to the success of power sector reforms in the State. Taking the employees into confidence and enhancing their willing support and strengthening the institutions of Electricity Regulators are critical factors for success and sustainability of power sector reforms.

6. The state govt. is committed to continue its active support in the restructuring of the power sector to ensure that benefit of the power sector reform are passed on to the consumers. I would like to impress upon all those associated with power sector that OERC fixes the tariff after taking into account the annual revenue requirement of the distribution utilities. This should also include various dues payable to the state govt. In this context, I want to point out that though direct subsidy is not being paid to the power sector, State govt. is paying indirect subsidy in several ways i.e. the payment of principal and interest by OHPC, GRIDCO have been kept under hold as deferred payment. Return is also not being assumed though it should have been at the rate of 14%.

7. There is an urgent need to curb the theft of energy which stands in the way of financial viability of the sector. Energy Police Stations have been opened but it has to perform and achieve result without being merely a ritual. There is a need for proactively registering theft cases and ensuring conviction. There is urgent need for change in outlook in the approach of the distribution licensees for redressal of grievances of the consumers for supply of uninterrupted power. The practice of looking into the grievances of the consumers in a traditional bureaucratic manner has to be given a go-bye. The new Mantra for the distribution utilities should be customer relationship management.

8. Rural Electrification still remains the greatest challenges before the state govt. and the distribution licensees. OERC need to evolve an affordable tariff structure for rural households and the distribution licensees are to ensure availability of quality power at affordable rates. There is also need for improvement in Delivery Mechanism. The local panchayats need to be actively associated in day to day maintenance and collection. The OERC, distribution companies, generating companies and the state govt. should jointly work out a road map to ensure that electricity industry in the state continues to grow from strength to strength and its benefits should largely be shared by the consumers.

9. The deliberation in the workshop on standard of performance and consumer satisfaction and best practices in other states should throw new lights and provide positive clues for improving standard of performance and turn around of the power sector in the State.

10. I once again thank the OERC, its employees and all the invitees for coming to participate in this workshop.