The Hindu : Karnataka News : Five-year-old power sector reforms have a long way to go

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Friday, Apr 08, 2005

Karnataka

Karnataka

Five-year-old power sector reforms have a long way to go

By Nagesh Prabhu

BANGALORE, APRIL 7. Even after the introduction of reforms in the power sector in the past five years, transmission and distribution (T&D) losses have remained above 30 per cent in the State. Moreover, Karnataka Power Transmission Corporation Ltd. (KPTCL) and the four power supply companies are facing a financial crisis on account of subsidised power supply and non-payment of dues to them.

The Karnataka Electricity Regulatory Commission (KERC) has recommended to KPTCL to initiate administrative measures such as energy audit and anti-theft law for reducing T&D losses. "No capital investment is required to reduce the commercial losses; only administrative measures are required," the KERC said in a report which assessed the power sector reforms between 1999 and 2004.

The reforms helped reduce the T&D losses, but only marginally. The T&D losses came down from 38 per cent in 1999-2000 to 30.59 per cent in 2003-04.

T&D losses

The Hubli Electricity Supply Company (HESCOM) projected the highest T&D loss of 31 per cent followed by the Gulbarga Electricity Supply Company (GESCOM, 29.21 per cent), Mangalore Electricity Supply Company (MESCOM, 24.04 per cent) and Bangalore Electricity Supply Company (BESCOM, 23.65 per cent).

The commission has directed the electricity supply companies to reduce the T&D losses in 46 towns and cities to a maximum of 15 per cent. In cities such as Hubli, Davangere, Dharwad and Gulbarga, the technical losses accounted over 10 per cent.

The KERC said KPTCL and the distributions companies lack efficient planning to reduce transmission and distribution losses. They need a planning cell. Future capital investment will have to be guided by such planning, it said.

The KERC Chairman, K.P Pandey, said the report was prepared with a view to taking stock of the effectiveness of power sector reforms in the last five years, which will help recognise the tasks ahead. Although the desired results have not come about, the commission is committed to pursuing its mission, he said.

Restructuring plan

The State Government has approved the Financial Restructuring Plan for the power sector for a 10-year period from 2001. The plan envisages allocation of Rs. 8,999 crores for the power sector. However, KPTCL ran up a huge accumulated revenue shortfall, which resulted in increased subsidy requirement larger than that envisaged in the plan.

The cost of power purchase is increasing each year on account of the increase in the quantum of purchase from new installations at higher rates and other reasons. It has increased from Re. 1 a unit in 1999 to Rs. 1.88 in 2005.

The anticipated shortfall of power in 2005 is 971 MW compared with 1,172 MW in 2004. Because of the failure of the monsoon between 2001 and 2004, hydropower generation declined from 10,432 million units to 6,909 million units in 2003-04.

In 2005, the hydropower availability has improved owing to the better monsoon.

There were many transformer failures. The failure was highest in MESCOM (17.81 per cent), followed by GESCOM (16.37 per cent), HESCOM (14.94 per cent) and BESCOM (11.75 per cent) in 2004.

The number of accidents increased in the four ESCOMS from 938 in 2003 to 979 in 2004. The number of accidents came down in BESCOM and MESCOM in 2004, and went up in HESCOM and GESCOM.

Directives flouted

The KERC has said KPTCL and the electricity supply companies have not followed the directives issued by it. The companies are yet to provide toll-free telephones in small towns and they have failed to submit to the commission a code of practices concerning payment of power bills by consumers. They have also not installed meters on streetlight installations.

Harm from subsidy

The power tariff has been increased by 41.65 per cent in the last four years. But the supply of subsidised power is a major financial drain on KPTCL and the supply companies. The outstanding balance of subsidy due to KPTCL in 2004-05 was Rs. 2,325.86 crores.

The revenue arrears from government installations, local bodies, subsidy towards rationalisation of irrigation pumpsets tariff in Malnad region and waiver of arrears from pumpset users were Rs. 1,762.73 crores.

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