This Memorandum of Understanding is made between the Ministry of Power, Government of India and Government of West Bengal to affirm the joint commitment of the two parties to ensure accelerated growth and operational efficiency in the power sector in West Bengal for the fulfilment of the objectives stated below. This Memorandum sets out the measures which West Bengal has already taken and shall take in future and the support Government of India will provide to achieve the common goal.

I. PREAMBLE:

1. West Bengal is committed to providing good quality uninterrupted power supply to all its people at affordable rates.

2. It is also committed to establishing commercial viability in the power sector so that the necessary investment needs of the sector can be met to cater to increasing demand for accelerating economic growth in West Bengal.

In order to achieve these objectives, Government of West Bengal has taken the following steps :

a) Government of West Bengal has set up West Bengal Power Development Corporation Ltd. In 1985.

b) Government of West Bengal has established West Bengal Rural Energy Development Corporation in 1998. The Corporation has the mandate of electrification of the rural areas and supply of electricity at 400 volts and below to consumers in rural sector of the State with active involvement of Panchayat institutions.

c) West Bengal Electricity Regulatory Commission has been constituted on 31st March, 1999. The Commission is currently considering the tariff petitions filed by WBSEB and other power utilities in the State.

II. REFORM PROGRAMME OF WEST BENGAL

1. The Government of West Bengal will complete rural electrification to provide electricity to all villages by March 2006.

2. The distribution activity of WBSEB will be restructured into profit centres. Each Centre shall prepare its own separate commercial accounts/.shadow profit and loss accounts by 31-3-2001..

3. WBSEB shall undertake energy audit at all levels to identify and reduce T&D losses to bring them to the level of 20% by 2005. This is to be done in a time bound manner with the following milestones :

• Complete metering of all EHV sub-stations and lines up to 11 KV latest by 30th September, 2001.
• Complete metering to all consumers by 31st December, 2001.
• Energy audit at 11 KV level would be operational by 31st December, 2001. On completion of energy audit, assessment of real T&D losses shall be drawn up and implemented.
• Development of effective distribution Management Information System.

4. The reform measures are being undertaken with the objective of achieving break-even in the SESEB by March, 2003 and getting positive returns thereafter.

5. All Thermal Power Plants of WBSEB, viz. Bandel and Santaldih have been decided to be brought under West Bengal Power Development Corporation Ltd.

6. West Bengal will ensure timely payment of subsidy required in pursuance of Government of West Bengal’s orders on the tariff determined by the WBERC.

7. West Bengal will ensure filing of tariff petitions timely and implement the orders of WBERC fully unless stayed by court orders.

8. West Bengal will maintain Grid discipline, comply with the Grid Code and Availability Based Tariff when its comes in force and carry out the directions of Regional Load Despatch Centres.

9. Government of West Bengal will securitise outstanding dues of CPSUs as per scheme approved by Government of India. After securitisation it will ensure that CPSU outstanding does not exceed two months billing.

In order to ensure fruition of the initiatives as above, support of Government of India shall be needed as below :

1. Government of India will provide funds from APDP for –

a) Renovation, Modernisation and Uprating of thermal and hydro electric units.

b) Upgradation of Transmission, Sub-Transmission and Distribution network including energy accounting and metering.

2. Government of India will assist West Bengal in full exploiting its hydro potential through development of projects by :

a) State Sector

b) Joint Venture of Government of West Bengal and CPSUs.

3. The Ministry of Power would through REC or other agencies provide adequate soft loans/funding for 100% electrification of villages and hamlets.

4. Power Finance Corporation would extend finance to West Bengal for meeting the financial needs of power sector in relaxation of normal conditionalities relating to exposure limit, ROR and DSCR.

5. Ministry of Power shall extend support to West Bengal in execution of critical Transmission Projects in the State by PGCIL/PFC.

III .IMPLEMENTATION:· Implementation of the MoU would be monitored every three months.

• Implementation of the MoU would be monitored every three months.
• 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 achieve the objectives mutually agreed upon in this Memorandum.

Signed this day the 25th of February, 2000 at New Delhi.