The Hindu Business Line : Unbundled distribution cos may open escrow accounts

IN a bid to ensure that the State Government-owned transmission corporation's revenue stream is protected, the unbundled distribution companies are expected to open escrow accounts.

Sources said this would allow a portion of the distribution companies' revenues to be assigned to the Karnataka Power Transmission Company Ltd (KPTCL).

Transmission charge tariff currently levied by KPTCL is about 18.67 paise a kilowatt-hour or unit.

The equity of the four distribution companies - Bangalore Electricity Supply Company Ltd (BESCom), Mangalore Electricity Supply Company Ltd (MESCom), Gulbarga Electricity Supply Company Ltd (GESCom) and Hubli Electricity Supply Company Ltd (HESCom) - is currently entirely owned by the Government.

But the State Government has indicated that it was prepared to exit its stake in favour of a private investor though it is yet to find any favourable suitor. However, the intra-regional transmission of electricity would remain a State monopoly and therefore the ownership of KPTCL was expected to remain entirely with the State Government.

The escrow account would be in addition to those created for the four independent power producers and the central generating stations. Besides generating companies and transmission companies, lenders such as Power Finance Corporation and Rural Electrification Corporation also would have escrow account. All these entities would effectively comprise the creditors of the distribution companies.

This escrow was being created as payment security mechanism to avoid any arrears build up to the transmission entity, the sources said. In the event of the payment defaults by any of the distribution companies, KPTCL would invoke the escrow account to recover dues.

The sources said the potential of default existed especially in view of the high distribution losses. These losses are currently at about 27 per cent. The losses include both technical and non-technical. The sources said despite the unbundling, the companies have so far not been successful in curtailing the losses.

Part of the high technical losses was also due to the fact that a large number of irrigation pump sets in the State are not metered .

There are at least 1.5 million irrigation pump sets in the State. According to data made available to the State Electricity Regulatory Commission, each of these sets consumes about 6,350 units annually. This translates into about 9,525 million units (MU).

This specific consumption is a figure that has been contested by the World Bank in the past in view of data inconsistencies.

One such inconsistency was that the IP consumption figures would imply that the entire hydro generation is consumed by the agricultural sector. Secondly, the figure for IP consumption, the bank has pointed out was over-estimated.

This was partly because physical audits of the number of operating IP sets have so far not been done by the State Government.

Accordingly, there is increasing belief that some of the non-technical losses were concealed as irrigation load.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page