umesh sharma
Tue, 02 May 2006 13:38:45 -0700
For those interested, here is the ADB loan $250 USD details for restructuring the ASEB.The ASEB has already advertised for global tenders for June 6 this year.. From other news reports, the ASEB labour unions and the CPI (M) are against any restructuring of ASEB and thus the loan itself.and this portion from the Sentinel editorial (Dec 21)Then there is the same bulldozing of the ruling party's will about the breaking up of the Assam State Electricity Board (ASEB) into five separate entities despite the fact that the ASEB is a losing concern and despite the fact that the foremost task before the ASEB is the control of theft of power which has already taken the so-called transmission and distribution losses to 45 per cent an unheard-of situation anywhere in the world. And everyone knows that the reason for making five organizations out of a sick one is that a huge amount of loans from the Asian Development Bank and other financial institutions are on the cards, and that five entities are better than one when it comes to treating big overseas loans like grants. Or take the perverse decision to hike property tax and municipal tax mainly in order to be able to pay salaries to a lot of people who have never done any work and do not ever intend to, and beyond that to give them pensions for doing nothing and resting afterwards. And the arbitrary 30 per cent hikes all round must come from the taxpaying citizen who is expected to go on subsidizing all kinds of mismanagement that the Government can invent. As a result, householders and taxpayers of Guwahati are expected to lose their property because at the present rate, the taxes are going to make the retention of such property quite impossible. These are just some of the ways in which an anti-people government works just to keep a vested interest called "the government" going. - Sentinel, Dec 21So, all this looks really murky, the ADB thinks the state will benefit from restructuring and electric supply, while others like the unions and the Sentinel, River Basin seem to be opposed.The question we all need to ponder is that Assam is bent out of shape because of the huge shortage of electric supply. Will the ADB $250 million loan solve this?If NOT, what other solutions do others have, and where will the FUNDING come from?--Ram______________________From the ADBHelping Indian State of Assam to Overhaul Power SectorMANILA, PHILIPPINES (10 December 2003) - The Asian Development Bank (ADB) will help the Government of Assam, India, restructure its power sector to deliver electricity more efficiently to consumers through a US$250 million loan package.The Assam Power Sector Development Plan (SDP) comprises a policy loan, an investment loan, and three technical assistance (TA) grants to support a comprehensive program of reform.The US$150 million policy loan will help restructure Assam State Electricity Board (ASEB), a vertically-integrated utility, into independent companies and strengthen its policy and regulatory framework to implement reforms.The US$100 million investment loan will improve the transmission and distribution system, introduce a revenue management system, and increase the reach of electricity in rural areas.Assam, a small state in the center of northeastern India blessed with abundant natural resources, is a strategic corridor for the region, but unreliable power from the state-owned ASEB has hampered industrial growth."The lack of sufficient and reliable power is eroding the state's competitiveness and prevents it from attracting industrial investments from outside," says Tomoyuki Kimura, an ADB Senior Energy Sector Specialist."Improved power supply at a reasonable cost is essential to revive the state's industry and economy. Equally important is improving the financial sustainability of the power sector so that it is no longer a drain on state finances."Because of technical and financial constraints, ASEB operates below capacity and is unable to meet the total power demand.ASEB tries to fill the supply shortage by purchasing power from neighboring states and other government enterprises, but financial problems caused by its high cost structure and poor billing and collection system are a major constraint.Only 21% of the 4.5 million households in Assam receive electricity and per capita power consumption is only 104 kilowatt-hours, less than one third of the national average.The Board is heavily dependent on state government support, resulting in more use of public funds at the expense of education and health, for example.The state government began its restructuring program with the establishment of the Assam Electricity Regulatory Commission (AERC) in 2001 to remove from it the task of regulating the power sector.It also "unbundled" ASEB into generation, transmission and distribution companies, but needs assistance to further implement the reform program.The SDP was included in the India Country Strategy and Program for 2003, which provides extended coverage to the northeastern region where the poverty incidence is much higher than the national average and where there is significant potential for regional cooperation.In preparation for the SDP, ADB approved a TA grant in 2002 to help the state government plan the restructuring of ASEB, and another TA grant in October 2003, financed by the Japan Special Fund, to boost the capacity of AERC to promote power sector reforms.Power is one of the major sectors in infrastructure development where ADB's intervention will be directed to policy reforms and capacity building, combined with physical investment support. Since 1986, ADB has provided over US$2.5 billion worth of loans and grants to India's power sector.The SDP includes three other TAs amounting to US$1.5 million for the reorganization of ASEB, institutional development for rural electrification, and policy and legal support for power sector reforms.The TAs will be financed by the India Trust Fund of the United Kingdom's Department for International Development and administered by ADB.The Finance and Power Departments of the state government are the executing agencies of the policy loan, which carries a 15-year term, including a grace period of three years.The state government's Power Department and ASEB are the executing agencies for the investment loan, which has a 20-year term, including a five-year grace period. The project is due for completion in December 2006.Both the policy and investment loans will come from ADB's ordinary capital resources, with interest determined in accordance with ADB's LIBOR-based lending facility.More at adb.org/media_______________________________________________
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