Speaking at a round table on Electricity Bill 2000 (Draft IV) organised by the Bengal Chamber of Commerce and Industry (BCCI) here on Thursday, honorary consultant and adviser, National Council of Applied Economic Research, Gajendra Haldea, said: "One of the major aims of the bill is to gradually reduce the cross-subsidy so that an equitable tariff could be offered."

Most of the cross-subsidies in the country are provided by industry and it has been demanding for quite sometime that this burden be reduced to make it competitive.

However, he made it clear that agriculture needs to be subsidised by the government.

Orissa Electricity Regulatory Commission (OERC) chairman Dhirendra K Roy said reforms in the Orissa power sector have helped reduce cross-subsidy in the state. In 1996, industry was paying 280 per cent and domestic consumers 38 per cent of the cost of energy, the figures are now 165 per cent and 70 per cent respectively, he added.

Haldea said the present draft of the Bill has omitted the issue of unbundling of state electricity boards as some of the states do not want it. "If we forced them, there would be more resistance.

Let them go in for unbundling based on their own experience," he explained and pointed out that dictated by experience, Gridco has decided to separate its transmission and distribution wing.

"If some states continue to oppose it, they may discover that funds from the financial institutions are not flowing in," he cautioned.

The director-general of Independent Power Producers Association of India, Harry Dhal, believes the draft should ask the state electricity boards to operate on a "sustainable basis" in order to bring the electricity price down.

"The issue is not of dismantling the SEBs, but of making the system effective and efficient," he said.

He said the future of the power sector lies in how effectively it can converge with information technology and the telecom sector. In the US, for example, 30 per cent of the optic fibre lines have been laid by power companies. "This will help transmission and distribution companies earn more profit," he said.

West Bengal Electricity Regulatory Commission chairman SK Phaujdar said the proposed legislation is silent about the principles and methodologies for determination of tariffs for distribution companies.

The OERC chairman believes that bringing the concept of maximum retail price into tariff will create disputes and avoidable legal and administration problems. The bill has defined tariff as the maximum price, rate and charge payable by a licensee or consumer with respect to supply, transmission, distribution or wheeling of electricity.

This will create scope for discrimination with all its ills, which may result in lack of transparency and corruption, he cautioned.