Tags:
Journalism of Courage
CHANDIGARH, MARCH 9: The World Bank has suspended payment of the first tranche of the $600 million (Rs 2400-crore) loan to Haryana for power sector reforms, threatening to initiate legal action against the electricity utilities in the state.
The Bank has so far disbursed only Rs 131 crore of the first tranche of $60 million (Rs 240 crore). The suspension of loan, which is a direct fallout of the muddled strategy pursued by Chief Minister Om Prakash Chautala, has been triggered by the state government’s failure to sign the amended agreements for continuing the reforms programme through the successor companies of the former Haryana State Electricity Board (HSEB) — Haryana Vidyut Prasaran Nigam (HVPN) and the two new distribution companies.
In a letter to Haryana Chief Secretary Ram S Verma, World Bank’s Country Director (India) Edwin Lim said the Bank “has decided to stop making any reimbursements or payments from the loan because India, Haryana and the successor companies of the former HSEB have failed to enter into the requisite legal arrangements.” The proceeds of the loan disbursed to these successor companies were not for eligible expenditures and the Bank was considering action in accordance with the legal agreements in this regard, he added.
The World Bank had written the letter to the state authorities eight weeks ago, but the Chautala Government, dithering on reforms, brushed it under the carpet. “The suspension is only a technical matter. There are no covenants in the signing of amended agreement. They are processing our requests,” said a Power Department official on the condition of anonymity. The World Bank’s letter comes after the state failed to meet the November 30 deadline for signing the amended agreements to transfer the responsibilities of execution of the project from HSEB to HVPN and the two distribution companies. “The political bosses were busy with the Assembly elections. The elections are over, but we are yet to a clear signal from them,” said a senior official.
The stand-off, which began when Chautala talked of switching off reforms, is beginning to threaten the second tranche of $250 million (Rs 1,100 crore). “The state will have to sign enter into the requisite legal agreements before any further financial dealings,” insisted a World Bank official. The amended agreements are of immediate concern to the funding agency, but it appears to be equally worried about inability of the State to hike agricultural tariffs from the existing 50 paise per unit to 75 paise on April 1, 1999 and to 100 paise per unit on April 1, 2000, in line with the agreement.
While Chautala is refusing to give his mind by ducking all queries on the issue, the Power Department officers have no idea where they are going. The World Bank’s Board cleared the Haryana loan in January 1998 and the State agreed to achieve certain milestones of progress. Initially, it did, with the Bansi Lal-led HVP-BJP Government separating the transmission and generation parts of the Haryana State Electricity Board on August 17, 1998, and setting up a Haryana Electricity Regulatory Commission (HERC).
Bansi Lal, however, slowed down when disgruntled legislators and an ambitious ally (BJP) threatened his government before pulling it down. The change in government dealt a blow to the reforms programme because Chautala, who succeeded Bansi Lal him on July 24, 1999, only talked of jettisoning the project.
