Mounting subsidy arrears and no relief package

The State government’s decision to exempt domestic consumers who use up to 120 units a month from the latest power tariff hike by providing a monthly subsidy of Rs.10 crore is likely to further worsen the financial crisis grappling the Kerala State Electricity Board (KSEB).

Board sources told The Hindu here on Friday that the government already owes Rs.250 crore as subsidy arrears to the KSEB and the latest decision to grant relief to a large section of domestic consumers without providing adequate financial support will again push it to the brink of a deeper financial crisis. Following an earlier tariff revision in September last year, the government had announced to compensate the financial loss incurred by the KSEB by paying a monthly subsidy of Rs.25 crore. The Cabinet decision to grant subsidy is bound to be reviewed in three months.

After releasing the first tranche of the subsidy, the decision got faltered on the alleged intervention of the Finance Department and the subsidy arrears mounted to Rs.200 crore till January. The Finance Department had adopted a stance that the subsidy will be released only after a fresh Cabinet direction. As per the provisions of the Electricity Act, if the government decides to grant a subsidy to any consumer, the onus will be on the government to mitigate the loss incurred on that score and it should be paid in advance too. Such conditions have not been observed while making the decision, the sources said.

The KSEB is expending about Rs.770 crore a month for power purchase to meet the State’s domestic needs. As per its estimates, power charge arrears due from State government departments alone have been pegged at Rs.868 crore. In addition are the dues from public sector undertakings and local self-government institutions. Owing to the KSEB’s lapse in evolving a centralised tariff payment mechanism, the Finance Department had issued a directive against releasing the energy charge arrears. No relief package has so far been announced to cushion the impact of the crisis so far.

If the Finance Department continues to throw fresh hurdles in releasing the arrears as well as the fresh component announced by the government, it will pave the way for a graver financial crisis in the KSEB, the sources said.

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