The Hindu : Andhra Pradesh / Hyderabad News : Discoms facing money crunch

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Monday, Jan 05, 2009
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Andhra Pradesh

Andhra Pradesh - Hyderabad

Discoms facing money crunch

M. Malleswara Rao

The final deficit is expected to touch a whopping Rs. 12,795 crore

HYDERABAD: The financial position of the four power distribution companies is in a downslide going by the projections submitted by them before AP Electricity Regulatory Commission (ERC) for the tariff year 2009-10.

The discoms will close the tariff year 2008-09 with a huge deficit of Rs. 5,269 crore. Coupled with the ‘true-up’ charges of Rs. 1,853 crore claimed by them for the deviations from the APERC’s specifications following instructions from the government, the deficit will swell to Rs. 7,122 crore.

The final deficit is expected to touch a whopping Rs. 12,795 crore considering that a deficit of Rs. 5,673 crore has been projected for 2009-10.

The deviations, which have caused a heavy revenue drain on the discoms, included power purchases from external sources at high cost to meet the ever increasing demand, the government’s decision not to hike the tariffs without releasing matching subsidy, hike in coal prices, gas shortage and use of naphtha to operate some power stations. Officials are hopeful of overcoming the deficit by collecting ‘fuel surcharge adjustment’ charges from consumers, improving internal efficiency and seeking matching subsidy.

The Annual Revenue Requirement reports containing these projections, which were submitted to ERC on November 29, have been kept as a closely guarded secret allegedly to avoid discussion in the Assembly which was in session then.

Neither the APERC nor the power utilities released the summary sheet of the projections to the media as they did in the past, despite the need to do so in view of the public hearings to be held by ERC before issuing the tariff order for 2009-10.

The discoms, however, have not proposed any tariff hike for consumers for the fifth consecutive year at the instance of the government. Their combined expenditure for 2008-09 has been put at Rs. 20, 414 crore against a revenue of Rs. 14,155 crore. In contrast, AP Transco has reported a profit of Rs. 101 crore and APGenco Rs. 240 crore for 2008-09.

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Andhra Pradesh