The Hindu : State loses Rs. 100-cr. aid under APDRP

Online edition of India's National Newspaper
Friday, Apr 18, 2003

Southern States

Southern States - Kerala

State loses Rs. 100-cr. aid under APDRP

By P. Venugopal

THIRUVANANTHAPURAM April 17 The State has missed out on an opportunity to claim Rs. 100 crores worth of incentives under the Centre's Accelerated Power Development and Reforms Programme (APDRP) because of the way it had prioritised the utilisation of the funds received in December, 2002, from the Asian Development Bank (ADB).

The State had received about U.S. $100 million (around Rs. 480 crores) from the ADB in December, 2002, as the first installment of the loan already sanctioned by it. The policy matrix approved by the bank had made a provision of about Rs. 200 crores during 2002-03 towards financing the revenue account deficit of the KSEB.

Had the State Government passed on this amount to the KSEB, it would have been possible for the State to seek an incentive of Rs. 100 crores under the APDRP for having minimised the KSEB's revenue gap, according to top sources in the Government.

The Centre proposes to set apart a sum of Rs. 40,000 crores for the APDRP during the 10th Five Year Plan period. Half of this amount would be earmarked for system improvement at the distribution and sub-transmission levels and other measures to reduce transmission and distribution loss. The remaining Rs. 20,000 crores is meant as incentives for achieving specific targets in reforms process, which, among other things, includes improving functional efficiency, wiping out past liabilities, improving revenue collection, tariff rationalisation, reducing costs, etc.

A sum of Rs. 1,750 crores was earmarked under this reform- linked incentive support to the States under the APDRP during 2002-03. The allocations under this incentive stream are meant to be disbursed to the States as a `one-for-two' matching grant based on `reduction of the gap between unit cost of supply and revenue realisation'.

In effect, the incentive would be matched in the ratio of 1:2 (i.e. for every two rupees of loss reduction, the incentive would be one rupee) to the overall reduction in the revenue gap achieved by the power utility.

The State Government, in fact, owes the KSEB quite a substantial amount towards compensation for subsidised supply of power to certain sections of the consumers as part of the Government's policy.

Also, the various Government departments and also public sector undertakings have huge dues with the KSEB towards power bills which had not been settled.

On the other side of the picture, the KSEB too owes the Government quite a sum towards Electricity Duty, though this amount is substantially lower than the sum the Government owes the KSEB as per the account books.

What the Government appears to have done with the provision made for the KSEB in the first installment of the ADB loan is to adjust the amount against the dues receivable from the KSEB towards duties. If this provision, coming to Rs. 200 crores, was utilised by the Government to settle part of the its dues with the KSEB under the heads of unpaid subsidies or unpaid power bills, the KSEB's revenue collection could have been shown to have improved by this amount.

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