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’sTotal RevenueTotal ExpenditureLoss (-) /Profit (+)Assumption of total Loss/Profit from 2013-2017
Maharashtra State Electricity Distribution Company Limited1,08,9881,11,799-2,81110,773 (+)
Andhra Pradesh Distribution Utilities89,25388,917337-4,655
Tamil Nadu State Electricity Board84,4521,08,302-23,850-54,755
Gujarat Distribution Utilities70,35770,044+31313,823 (+)
Karnataka Distribution Utilities55,93257,611-1,6792,474 (+)
Madhya Pradesh Electricity Board38,54847,518-8,969-11,312
Punjab State Electricity Board52,25257,394-5,142-3,071
Uttar Pradesh State Electricity Board56,98876,463-19,475-31,429
Rajasthan Electricity Board60,48368,208-7,725-9,219
Haryana Electricity Board40,55345,073-4,520- 1,583
Bihar State Electricity Board12,39916,872-4,473- 9,609
Kerala State Electricity Board26,13325,679454 (+)2,288 (+)
Jharkhand State Electricity Board10,08513,613-3,5283,285 (+)
Himachal Pradesh12,19612,268-71-1,201
Uttarkhand7,0808,470-1,390-1,276

(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

2011-20122012-20132013-20142014-20152015-20162016-2017
Total Revenue2,44,8022,68,8152,94,7263,23,2523,54,2543,89,867
Total Expenditure2,72,3512,96,0243,21,2913,48,8793,78,4184,11,977
Profit/Loss-27,549-27,209-26,565-25,626-24,164-22,110
Unit Consumed 57,99263,65269,79276,54683,88992,299
Unit Available 75,09681,56688,50696,0731,04,1751,13,388
Unit Lost Due to faulty distribution17,10417,91418,71419,52720,28621,089
Average Cost Per Unit Sold4.704.654.604.564.514.46
Average Realisation Per Unit Sold4.214.214.214.214.214.21

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 DescriptionParticularsItems2011-12
Power Generation ( Million Units)CentralTarget3,54,061
Achievement3,64,005
StateTarget3,59,761
Achievement3,67,953
PrivateTarget1,41,178
Achievement1,39,647
TotalTarget8,55,000
Achievement8,76,888

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

YearAverage Cost of SupplyAverage RealizationGap
2001-0224618165
2002-0323819543
2003-0423920336
2004-0525420945
2005-0626022139
2006-0727622749
2007-0829323954

(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

YearLosses ( Rs crore)
2001-200229,331
2002-200321,245
2003-200419,107
2004-200523,995
2005-200620,869
2006-200727,101
2007-200831,862

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

YearTotal Outstanding Dues ( as on March 31, 2010)
2002-200341,335
2003-20046,748
2004-20056,081
2005-20062,841
2006-20072,910
2007-20083,796
2008-20094,290
2009-20106,082

( 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

SectorsType2007-20082008-2009
CentralThermal13,50215,444
Hydro3,9755,350
Nuclear1,886604
Transmission6,7038,301
Distribution184310
Total Central26,25030,009
StateThermal14,56114,065
Hydro1,6811,585
Transmission7,50211,080
Distribution14,01015,570
Total State37,75642,301
All IndiaThermal40,25348,925
Hydro7,1529,209
Nuclear1,886604
Transmission14,20719,381
Distribution15,87617,834
Grand Total All India79,37395,954

(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.

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