The Hindu Business Line : Power distribution cos in Karnataka post losses despite tariff hikes

Even after the tariff hikes, the revenue deficits of the four discoms would be close to Rs 2,600 crore. For the last financial year the losses were Rs 1,718 crore. In the case of the Bangalore alone, the revenue deficits at Rs 460 crore were in excess of the net worth.

Bangalore , June 20

KARNATAKA'S four power distribution companies (discoms) continue to show high distribution losses despite three years of unbundling.

Distribution losses in the Bangalore circle alone are estimated to be in the region of about 22 per cent. In the remaining three circles, Hubli, Gulbarga and Mangalore, the losses are closer to 25 per cent. These losses include both technical and non-technical ones.

Since the beginning of power reforms, tariffs in 1999 - 2000 have escalated by close to 50 per cent, though this has failed to contain the revenue deficits.

If this year's proposed tariffs were also included, the effective increase since the beginning of this decade would be close to 62 per cent. The average tariffs in Karnataka were 2.05 paise per unit hour in 2000. If the proposed hike goes through, the average would be about Rs 3.30 a unit.

Besides, even after these tariff hikes, the revenue deficits of the four discoms would be close to Rs 2,600 crore. For the last financial year the losses were Rs 1,718 crore. In the case of the Bangalore alone, the revenue deficits at Rs 460 crore were in excess of the net worth.

State Government officials said that one of the fundamental factors behind the high revenue deficits were the fact that the revenues of the discoms would continue to be under reported. This was largely on account of unmetered connections in the State's four discoms.

Unmetered connections implied that the billing to these consumers was decided on an ad hoc basis on the fixed monthly/periodic payouts.

Consequently this resulted in underreporting of incomes in many of the circles.

This was particularly so in circles such as Gulbarga and Hubli which have estimated revenue deficits of Rs 690 crore and Rs 1,028 crore respectively for the next fiscal year.

In both these regions, the sources said the concentration of umetered connections were high. They said that with the proposal to keep irrigation pump sets out of the purview of the tariff increases; the losses of the distribution companies were unlikely to be corrected in the immediate term.

Total unmetered connections in the State are currently about 1.4 million. However, not all the unmetered connections were irrigation related . A majority of the unmetered connections were non-irrigation ones.

The sources said that this was one of the major reasons for the high level of revenue deficits. In fact, one of the major non-technical loss reduction methods that was suggested by the consultants in the past was metering of all the connections. This would have allowed for greater accuracy in assessing power purchase costs.

The sources that these losses of the Discoms would in turn impact the State Government's revenues as well. This year, the provisions made in the budget were Rs 1,779 crore.

However the combined losses of three of the distribution companies, which have high agriculture load, for the current financial year is Rs 2,100 crore. This was on the basis of current power purchase estimates.

On the other hand if sales are affected on account of non-availability due to power cuts, the losses could turn out to be even higher.

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