Report of Indian Institute of Public Administration ... - Ministry of Power

Karnataka
Sheet Restructuring Plan provided a total financial support of Rs 1,800 crore to the
restructured company (KPTCL) and the second such exercise included the write off of
KPTCL’s receivables of Rs 866 crore. This also aimed to restrict the total subsidy
payable to the sector for the subsequent ten year period to Rs 12,140 crore, exclusive
of Rs 1,050 crore taken over towards the long-term debt servicing of KPTCL
(erstwhile KEB).
In actual practice, however, the large amount of subsidies to the sector continues to
persist, with no respite visible in the near future. The following Table provides the
details of profit, loss, and subsidies to the distribution sector in the recent years:
Year
Table: Details of Profit and Loss
Profit after
tax
(Accrual
basis)
Cash profit
(accrual basis
excluding
depreciation
and write-offs)
3.33
Cash profit
(subsidy
received
basis)
Cash profit
(Revenue and
subsidy on
realised basis)
(Rs crore)
Loss
without
Subsidy
2002-03 340 943 849 103 (1,599)
2003-04 310 1,034 689 412 (1,315)
2004-05 462 1,259 1,092 621 (1,107)
Total 1,112 3,236 3,630 1,136 (4,021)
(Source: PFC)
Thankfully, the extent of losses without subsidy has come down from Rs 1,599 crore
in 2002-03 to Rs 1,107 crore in 2004-05, that is by as much as 31 per cent over the
three-year period, which shows significant improvement. However, the gap between
the average cost of supply and the average revenue realised continues to vary between
Rs1.30 per unit for HESCOM and Rs 0.06 for BESCOM. Efforts must be continued to
reduce the gap and to gradually eliminate the subsidy by efficient planning, and
measures aimed at increasing revenue and reducing costs.
METERING PROGRESS
Government of Karnataka had initiated a three-year programme in 2002-03 for 100
per cent metering of all service connections; but this has not succeeded due to severe
resistance from the farmers. According to MESCOM’s Business Plan, the Universal
Metering Plan is a limited success. The Plan states that the metering of IP sets in three
districts were completed. Due to resistance of farmers, the progress in one division
(Sagar) was only 50 per cent. BESCOM’s metered consumption comes to only 49 per
cent of the total sales in 2004-05, though there is marginal increase from the previous
years. HESCOM claims that it has achieved some 87 per cent overall efficiency in