KSEB will have to focus on fiscal discipline

Published: 26th September 2012 08:40 AM  |   Last Updated: 26th September 2012 08:42 AM   |  A+A-

By clearing a Rs 1.9 lakh crore restructuring package for the power sector on Monday, the Centre has signalled cash-strapped power utilities such as the Kerala State Electricity Board (KSEB) to get their act together, but meeting the conditions could prove tough.

The KSEB currently flounders in a Rs 3,000 crore debt, of which Rs 800 crore piled up since March last owing to the leap in naphtha prices.

One fallout of the package, according to experts, is that distribution utilities will have to revise tariff regularly to prevent running up huge debts with the banks.

Even before the tariff revision in July which came after a full decade, the KSEB, soon to be a company, had suggested making tariff revision an annual exercise.The present tariff is valid up to March 31, 2013.

In reality, tariff revision depends on extraneous factors like populist politics.Another recommendation is that power utilities should introduce prepaid meters for defaulting government consumers.

The KSEB has been toying with this idea for some time now, but has hesitated since in actual practice it will prove difficult, senior KSEB officials said.

“For instance, shutting off supply to a pumping station of the Kerala Water Authority (KWA) or medical colleges for defaulting on bill payments is not practical.

There is a social angle to it,’’ said KSEB member (Finance) S Venugopal.

According to the data furnished by the State before the Kerala High Court, government institutions owe the KSEB over Rs 600 crore in unpaid power bills. The KWA accounts for half of this amount.

The High Court has asked the KSEB to set up a mechanism to avoid arrears mounting.“We have not got the full details of the Centre’s package yet.

But we understand that a number of states where the crisis is severe, will get priority.Despite all problems, the KSEB is still better off compared to other states’’ Venugopal said.

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