Dip in returns, commitments may cripple KSEB

Board is reeling under a grave resource crunch

A major dip in returns coupled with mounting financial commitments are likely to cripple the functioning of the Kerala State Electricity Board (KSEB) which is reeling under a grave resource crunch.

Board sources told The Hindu that the loss till April 14, when the first phase of lockdown ends, had been pegged at about ₹500 crore. An extension in curbs anticipating a community spread of the virus would further compound the crisis.

NTPC charges

Among the major commitments was the fixed charges paid to the National Thermal Power Corporation (NTPC) without evacuating power from its Kayamkulam plant, sources said.

Though the board had succeeded in bringing down the fixed charge much below the demand for ₹297 crore through negotiations, it was constrained to yield to the arm-twisting tactics of the corporation.

The board accepted the corporation’s demand in the face of the corporation’s insistence that on refusing to pay the fixed charges, the former will not be allowed to source power from its other generating stations outside the State. The board had no option but to yield to the duress, sources said.

The board had struck long-term pacts with various power producers for sourcing 3,000 mw to ensure uninterrupted supply to the State. Following the spread of COVID-19, the board had to cope up with a 20% dip in demand and meet the payments due to the suppliers.

The closure of industrial units as well as suspension of all commercial activities had taken a heavy toll on the returns of the board.

Tough challenge

Even if the government decides to lift the lockdown or ease the curbs, reviving the industrial and commercial activities at one go would be a tough challenge.

Since the government has granted a grace period for paying the power bills to all consumers, the daily revenue collection from power distribution has declined from ₹45 crore to ₹5 crore, sources said.

The board would have to draw heavily from financial institutions and banks to meet its committed expenditure including salary and other payments at substantial rates of interest. And that would again add to the revenue worries of the board.

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Printable version | Jul 15, 2020 5:55:49 PM |

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