Power PSU top executives may be held responsible for missing targets

The government may hold top executives responsible if state-run power sector companies fail to meet performance targets and punish them with fines and transfers.

The strict performance parameters are aimed at ensuring that at least the reduced target for 62,000 mw of generation capacity addition is achieved before the end of the 11th Plan, said a power ministry official. Performance of chairmen and managing directors of the power PSUs in project implementation will be assessed as per the terms and conditions stipulated in the company’s memorandum of understanding (MoU) with the power ministry, he said, requesting anonymity.Power sector advisory body Central Electricity Authority (CEA) will do the assessment and recommend appropriate action. The new rule proposed by the power ministry will cover chairmen, managing directors, functional directors, executive directors and chief engineers.

All central power PSUs such as NTPC, NHPC, PFC, REC, PowerGrid, Satluj Jal Vidyut Nigam and NEEPCO are under the administrative control of the power ministry.

Performance parameters of executives came under strict scrutiny due to a lack of progress in capacity addition programme. While the target for the 11th Plan has already been scaled down by the government from 78,500 mw, in the first three years of the plan yielded only 22,302 mw of fresh capacity.

More than 40,000 mw of capacity needs to be added in the remaining two years, which is seen as too ambitious by many exporters.

“The CEA has been asked to make specific recommendations with respect to slippage in performance of CMDs in project implementation to identify shortcomings and make it easier to take action,” said the official quoted earlier. In addition, the power ministry has made it mandatory on all PSUs to fix key performance areas (KPA) of project implementation for each layer of hierarchy beginning with the level of chief engineers and up to the level of director (projects), at the beginning of each year. KPA would stipulate the milestone for each critical activity including timeline for each of these.

“In may cases we have found that top level executive of companies are to be blamed for slippage,” said a CEA official, who also asked not to be named.

The KPAs will be reviewed once in six months at each level beginning with the level of chief engineer. Outcomes of the review meetings would be reported to CMDs, who will submit the report to the CEA and the ministry of power in 15 days of holding the review meeting.

“We hope that the practise would do wonders for improving the efficiency of power sector companies and build a culture where performance is treated seriously and targets sacrosanct,” said a former advisor with the Planning Commission who was involved in the power sector reforms.