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Tuesday, Feb 05, 2002

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KPTCL tariff revision proposals rejected

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THE State Electricity Regulatory Commission (SERC) has rejected the tariff revision proposals of the Karnataka Power Transmission Corporation Ltd (KPTCL).

The SERC, (Karnataka), which made its orders on Monday, observed that the expected revenue charges and tariff proposals were not in accordance with the various statutory provisions of the Electricity Supply Act of 1948.

The SERC's observations come after it has vetted the tariff proposal of the KPTCL, which had proposed a tariff hike to the extent of 23 per cent.

In the tariff filing , the KPTCL had shown a cumulative revenue gap of Rs 1,890.80 crore for the current financial year and Rs 2,107.54 crore for the next year.

The uncovered gap during the current year would be of the order of Rs 610 crore and the next year even after the proposed tariff is taken into account, the deficit has been estimated at Rs 644 crore.

The SERC had questioned KPTCL as to how it intended meeting this revenue gap, which would exist even after the subsidy payout by the Government.

In its reply the KPTCL had conveyed that it intended cutting back on plan expenditure and "defaulting on current liabilities.''

Current liabilities include power purchase bills. These liabilities could amount to Rs 1,592 crore by this fiscal year end.

The commission in its observation noted, "While a temporary mismatch between revenues and expenditure could be tided over by elongation of the credit terms offered by power generating companies, such a postponement cannot be attempted on an indefinite basis without any specific plans being worked out to meet the payment liabilities.''

The commission said in its order, "The expedient of defaulting on current liabilities, especially those for purchase of power, that the licensee (KPTCL) has resorted to and plans to continue to resort to in the ensuring financial year is clearly in violation of all norms of commercial prudence.

This approach would lead to an eventual stoppage of supply from the generating companies and a collapse of the whole system.''

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