THIRUVANANTHAPURAM: The state government is stuck on the horns of a dilemma regarding the Union Power Ministry’s UDAY scheme meant for bailing out loss-making power distribution companies. While the Kerala State Electricity Board (KSEB) management is not wholly averse to joining, the Finance Department is reportedly dithering as it could entail huge financial liability on the state government.
UDAY - short for Ujwal DISCOM Assurance Yojana - was cleared by the Union Cabinet in November 2015 as a solution to the losses in power distribution companies (DISCOM). (According to the Centre, the accumulated DISCOM losses, as on March 2015, stood at a whopping `3.8 lakh crore.)
A chief requirement of UDAY is that state governments take over 75 per cent of the distribution company’s debt as on September 30, 2015, over a period of two years. Future losses should be taken over by the state in a graded manner.
The liability that would result by the debt takeover is one reason why the Kerala government is refusing to take a call, sources say. The liabilities of the KSEB - as on November 23, 2015 - stands at `5,905.11 crore, reveal the Power Department data submitted in the state Assembly.
Although UDAY is optional, the fact is that Kerala cannot simply ignore it. The Centre has set a condition that states which fail to meet ‘operational milestones’ will lose claim on grants provided under the Integrated Power Development Scheme (IPDS) and Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) - two major schemes for improving power supply in urban and rural areas respectively.
‘’The KSEB is keen on joining, but we have informed the Centre that a final decision rests with the state government,’’ says KSEB chairman M Sivasankar.
Meanwhile, the powerful KSEB Officers Association is wary of UDAY, and views it as a ploy to squeeze in controversial power sector reforms and privatisation into the power sector.
“UDAY is a precursor to divesting the liabilities of distribution companies before introducing reforms and privatisation. At present, cost escalations in power generation are resulting in massive losses on the distribution side. It is not right to transfer those losses to state governments without monitoring and addressing the issues in power generation,’’ says KSEBOA general secretary M G Suresh Kumar.