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

1.1 INTRODUCTION
CHAPTER - 1
ANDHRA PRADESH
Andhra Pradesh State Electricity Board (APSEB) was one of the largest and
most efficiently run power Utilities in the country. The State witnessed
phenomenal growth in the power sector after the formation of APSEB in 1959.
The following figures indicate the achievements of APSEB during its existence
of about four decades.
Table 1.1: Achievements of APSEB Since 1959
Particulars 1959-60 1997-98
Installed generation capacity (MW) 213 7,276
No. of villages electrified 2,496 26,565 (100%)
No. of consumers (lakh) 2 100
No. of agricultural connections (lakh) 0.13 20
APSEB was earning three per cent rate of return (ROR) on net fixed assets
consistently till the late 1980s. The financial strain started from 1989-90 and
the situation continued to worsen over the years. By the end of the year 1997-
98, the outstanding dues of APSEB were of the order of Rs 2,600 crore. The
major causes for the worsening financial position of APSEB were:
• Increased capital investments;
• Increased operational costs;
• Increased burden of debt servicing;
• Lack of timely tariff adjustments to match the growing cost of supply;
• Increase in consumption by the subsidised agricultural sector;
• No flow of cash subsidy from the State Government; and
• Rising T&D losses.
APSEB, therefore, was not in a position to raise funds for capital investments
in the power sector. The financial institutions started insisting on reform and
restructuring of APSEB as a pre-condition for lending capital support for