Long-awaited reforms in Bihar’s power sector took effect on Thursday with the unbundling of the state electricity board into five separate companies to take specific care of generation, transmission and distribution in the power-starved state.
A year after the Nitish Kumar-led NDA government gave in-principle approval to the proposal for unbundling the Bihar State Electricity Board (BSEB), a formal, detailed decision to set up the five companies was notified on Wednesday. The state government had approved the restructuring, which was originally mooted in 2001, last week, pledging to spend an estimated `14,099 crores in the next five years on the financial restructuring scheme.
Of the five newly-incorporated companies, Bihar State Power Company Limited will be the holding company that will own the shares of the other four new companies — Bihar State Power Transmission Company, Bihar State Power Generation Company, South Bihar Power Distribution Company and North Bihar Power Distribution Company. BSEB’s losses would not be transferred to any of these five companies, said Bihar energy secretary Sandeep Poundrik, who issued the unbundling notification.
Power supply in Bihar, a perennial source of public anger, is now expected to improve, though the state’s installed generation capacity currently is only 559.2 MW. Bihar power minister Bijendra Prasad Yadav said the five companies had been given a year to turn into self-sustaining entities.
“In power-starved Bihar, these reforms are very necessary both to serve the consumers and attract private investors,” said Mr Yadav.
“BSEB’s restructuring will boost the reform process in Bihar’s power sector as the five new companies will have no financial encumbrance. They will be managed in a more professional manner with greater efficiency, and therefore will have higher credit ratings to borrow funds for expansion in future,” BSEB chairman P.K. Rai, who has been made one of the directors in the holding company, said.
After showing the door to a few senior BSEB officials for dereliction of duty in recent weeks, the state government plans similar action against many others to improve efficiency, said sources.