India’s Most Bankrupt Electricity Boards

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

(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

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

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

(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

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

( 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

(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.