The Public Accounts Committee  examines how the Government spends public money. It examines the amount granted by the Parliament and the amount actually spent. A Speaker in the past, has passed a direction which specifies clearly that a Minister cannot be summoned by the Financial Committees.  This has been incorporated in a document titled "Directions by the Speaker" available here. The actual text of the direction reads - "99. (1) The Committee on Estimates or the Committee on Public Accounts or the Committee on Public Undertakings may call officials to give evidence in connection with the examination of the estimates and accounts, respectively, relating to a particular Ministry or Undertaking. But a Minister shall not be called before the Committee either to give evidence or for consultation in connection with the examination of estimates or accounts by the Committee." -Co-authored by Chakshu

Reports suggest that a debt restructuring plan is being prepared for power distribution companies (discoms) in seven states - Uttar Pradesh, Punjab, Rajasthan, Haryana, Andhra Pradesh, Tamil Nadu and Madhya Pradesh.  According to some estimates, the combined outstanding debt for discoms is Rs 2 lakh crore.  Discoms have been facing heavy losses.  According to a Planning Commission Report, the cost of supplying electricity increased at a rate of 7.4 per cent annually between 1998-99 and 2009-10.  The average tariff has also increased at an annual rate of 7.1 per cent over the same period.  However, the report shows that the average tariff per unit of electricity has consistently been much lower than average cost of supply per unit.  Between 2007-08 and 2011-12, the gap between average cost and average tariff per unit of electricity was between 20 and 30 per cent of costs.

Average cost and average tariff per unit of electricity (Rs per kWh)

Year

Unit cost

Average tariff per unit

Gap between cost and tariff

Gap as percentage of unit cost

2007-08

4.04

3.06

0.98

24%

2008-09

4.6

3.26

1.34

29%

2009-10

4.76

3.33

1.43

30%

2010-11

4.84

3.57

1.27

26%

2011-12

4.87

3.8

1.07

22%

Source: “Annual Report 2011-12 on the Working of State Power Utilities and Electricity Departments”, Planning Commission State discoms have been losing money due to higher costs than revenues, as well as high transmission and distribution (T&D) losses.  The commercial losses for discoms in India (after including subsidies) increased from Rs 16,666 crore in 2007-08 to Rs 37,836 crore in 2011-12. Reports suggest that the restructuring plan being prepared will be worth Rs 1.2 lakh crore in short-term liabilities.  Half of the proposed amount would be issued as bonds by the discoms, backed by a state government guarantee.  Banks and financial institutions would reschedule the remaining Rs 60,000 crore of debt, with a moratorium of three years on payment of the principal amount.  State governments that adopt the financial restructuring plan would not recover any loans given to discoms before they start showing profits. Under a proposed transition finance mechanism, the central government would reimburse 25 per cent of the principal amount of bonds to states that fully implement the plan.  Also, states that achieve a reduction in T&D losses above a targeted level in three years may be given grants.  Newspaper reports also suggest that states will have to prepare plans for eliminating the gap between the average cost and average tariff per unit of electricity.