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India’s Most Bankrupt Electricity Boards

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Accumulated losses, state governments not following grid discipline and the rising gap between cost and realization…

IndiaSpend’s Sourjya Bhowmick finds out which electricity boards are likely to sink deeper into the red, and whether there is any likely respite for consumers….

 

Around 60 crore people across 22 states faced severe power cuts in the last few days. The problem, it seems, is still not over, as suggested by media reports.

 

As per the Shunglu Committee Report, which came out in December 2011, the accumulated losses of state electricity boards totalled Rs 1, 07,000 crore as on March 2010. It was Rs 19,000 crore in March 2005. So, in five years, the loss has increased by Rs 88,000 crore.

 

Now, let us take a look at each of the State Electricity Boards (SEBs) in the period from 2005-2010 and forecasts for the period 2013-17:

 

Table 1: Current & Future Financial Performance Of State Electricity Boards

 

SEB’s Total Revenue Total Expenditure Loss (-) /Profit (+) Assumption of total Loss/Profit from 2013-2017
Maharashtra State Electricity Distribution Company Limited 1,08,988 1,11,799 -2,811 10,773 (+)
Andhra Pradesh Distribution Utilities 89,253 88,917 337 -4,655
Tamil Nadu State Electricity Board 84,452 1,08,302 -23,850 -54,755
Gujarat Distribution Utilities 70,357 70,044 +313 13,823 (+)
Karnataka Distribution Utilities 55,932 57,611 -1,679 2,474 (+)
Madhya Pradesh Electricity Board 38,548 47,518 -8,969 -11,312
Punjab State Electricity Board 52,252 57,394 -5,142 -3,071
Uttar Pradesh State Electricity Board 56,988 76,463 -19,475 -31,429
Rajasthan Electricity Board 60,483 68,208 -7,725 -9,219
Haryana Electricity Board 40,553 45,073 -4,520 – 1,583
Bihar State Electricity Board 12,399 16,872 -4,473 – 9,609
Kerala State Electricity Board 26,133 25,679 454 (+) 2,288 (+)
Jharkhand State Electricity Board 10,085 13,613 -3,528 3,285 (+)
Himachal Pradesh 12,196 12,268 -71 -1,201
Uttarkhand 7,080 8,470 -1,390 -1,276

 

(All figures in Rs crore) Data is only available for these states.

 

Source: Shunglu Committee Report

 

Tamil Nadu Suffers Most Losses

 

Tamil Nadu State Electricity Board tops the list with a loss of over 23,000 crore rupees followed by Uttar Pradesh at 19,000 crore rupees and Madhya Pradesh at 9,000 crore rupees.  While Rajasthan State Electricity Board had an accumulated loss of over 7,700 crore rupees, Punjab SEB has a loss of over 5,500 crore rupees.

 

And the story is likely to continue for 2013-2017. Tamil Nadu SEB will have an accumulated loss of nearly 55,000 crore rupees followed by Uttar Pradesh at 31,000 crore rupees.

 

Only Kerala, Gujarat and Karnataka SEBs are making profits, and are expected to do so in the future.  Maharashtra and Jharkhand SEBs, while running losses now, may make profits in the long run.

 

Not A Bright Road Ahead


The report has also forecast the likely performance of distribution utilities for the next few years:

 

Table 2: Current & Future Performance Of State Electricity Boards & Electricity Distribution

 

  2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Total Revenue 2,44,802 2,68,815 2,94,726 3,23,252 3,54,254 3,89,867
Total Expenditure 2,72,351 2,96,024 3,21,291 3,48,879 3,78,418 4,11,977
Profit/Loss -27,549 -27,209 -26,565 -25,626 -24,164 -22,110
Unit Consumed 57,992 63,652 69,792 76,546 83,889 92,299
Unit Available 75,096 81,566 88,506 96,073 1,04,175 1,13,388
Unit Lost Due to faulty distribution 17,104 17,914 18,714 19,527 20,286 21,089
Average Cost Per Unit Sold 4.70 4.65 4.60 4.56 4.51 4.46
Average Realisation Per Unit Sold 4.21 4.21 4.21 4.21 4.21 4.21

 

Source: Shunglu Committee Report

 

From the table, a few things are clear;

 

  • While total revenue will increase, expenditure will also increase but average realisation per unit sold will remain constant. Therefore, losses will continue.
  • While availability will increase along with consumption, so will the transmission and distribution loss, leading to losses for electricity boards…

 

The power sector in India, including generation, transmission and distribution, is operated through state electricity boards and a few private companies.  It is said that excess withdrawal by the Northern Grid was the reason behind the power debacle.

 

Power Generation Scenario In India


Let us now look at the power generation scenario across the country:

 

Table 3: Power Generation Across India

 

Project Description Particulars Items 2011-12
Power Generation ( Million Units) Central Target 3,54,061
Achievement 3,64,005
State Target 3,59,761
Achievement 3,67,953
Private Target 1,41,178
Achievement 1,39,647
Total Target 8,55,000
Achievement 8,76,888

 

Source: Planning Commission

 

The above table is based on a Planning Commission report which talks of the target and achievement in 2011-12. We can see that the central, state and private companies achieved their targets.

 

In the same year, the power sector has done well in capacity addition as well. The total target was 17,601 MW and 20,501 MW was achieved.

 

Major Supply-Realisation Gap

 

The average cost of supply and realization shows a major gap over the years:

 

Table 4: Average Cost Of Supply & Realisation

 

Year Average Cost of Supply Average Realization Gap
2001-02 246 181 65
2002-03 238 195 43
2003-04 239 203 36
2004-05 254 209 45
2005-06 260 221 39
2006-07 276 227 49
2007-08 293 239 54

 

(In paise/unit)

 

Source: CEA Annual Report

 

Unfortunately, the data is available only till 2007-08.

 

Losses Incurred By SEBs

 

There are no subsidies given to state electricity boards by the central government, and, as a consequence, they suffer major losses.  The table shows the commercial losses of power utilities over the years:

 

Table 5: Commercial Losses Of Power Utilities

 

Year Losses ( Rs crore)
2001-2002 29,331
2002-2003 21,245
2003-2004 19,107
2004-2005 23,995
2005-2006 20,869
2006-2007 27,101
2007-2008 31,862

 

Source: CEA Annual Report

 

State electricity boards suffer majorly due to the gap between cost of supply and realization.  They fail to make full payment to central power sector utilities (CPSUs) for purchase of power and coal. This eventually leads to major outstanding dues.

 

Table 6: Outstanding Dues Of State Electricity Boards

 

Year Total Outstanding Dues ( as on March 31, 2010)
2002-2003 41,335
2003-2004 6,748
2004-2005 6,081
2005-2006 2,841
2006-2007 2,910
2007-2008 3,796
2008-2009 4,290
2009-2010 6,082

 

( in Rs crore)

 

Source: CEA Annual Report

 

The dues came down after 2002-2003 as the government offered a one-time settlement scheme and waived 60% interest and surcharge.

 

Capital Expenditure Almost Rs 100,000 cr

 

Let us now take a look at the total capital expenditure incurred on generation, transmission and distribution:

 

Table 7: Total Capital Expenditure Incurred

 

Sectors Type 2007-2008 2008-2009
Central Thermal 13,502 15,444
Hydro 3,975 5,350
Nuclear 1,886 604
Transmission 6,703 8,301
Distribution 184 310
Total Central 26,250 30,009
State Thermal 14,561 14,065
Hydro 1,681 1,585
Transmission 7,502 11,080
Distribution 14,010 15,570
Total State 37,756 42,301
All India Thermal 40,253 48,925
Hydro 7,152 9,209
Nuclear 1,886 604
Transmission 14,207 19,381
Distribution 15,876 17,834
Grand Total All India 79,373 95,954

 

(In Rs crore)

 

Source: CEA Annual Report

 

It is evident from the table that almost 100,000 crore rupees went into providing power in 2008-09 including private expenditure of 23,645 crore rupees.

 

India presently has an installed capacity of over 2 lakh MW and is planning to add another 75,785 MW at the end of the 12th Plan (2016-2017). This would require an estimated fund requirement of Rs 6,38,600 crore which includes Rs 2,72,582 crore as advance for the 13th Plan projects.

  1. Satyabrata Chakraborty Reply

    August 3, 2012 at 11:36 am

    Analytical and useful report. Would be happier had there been West Bengal figure. But as you write, that data was not available. One rather cynical impression after going through the piece: Let there be no light!

  2. Prasanna Reply

    August 3, 2012 at 12:04 pm

    Has the report accounted the recent hike in power tariffs in Tamilnadu? Wouldn’t the recent hike reduce the deficit if not wipe it out?

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