SEBs loss to cross Rs 15,000 crore by end of Ninth Plan

SEBs loss to cross Rs 15,000 crore by end of Ninth Plan
PRESS TRUST OF INDIA

NEW DELHI, JULY 30: State Electricity Boards (SEBs) are likely to incur a total commercial loss of over Rs 15,000 crore by the end of the Ninth Plan period mainly on account of the poor financial health of these boards and the subsidy burden.

"The commercial losses of the SEBs without subsidy increased from Rs 9,977.6 crore during 1996-97 to Rs 12,323 crore in 1998-99. The projected commercial loss at the end of the Ninth Plan (2001-02) would be Rs 15,330 crore," Planning Commission said in its mid-term review paper of the energy sector.

The paper, which is under finalisation, said the internal resources of the SEBs continued to be negative and during the Ninth Plan, the internal resource of the SEB was Rs 3,728.97 crore in 1997-98 and in the year 1998-99 it was expected to be Rs 3,399.1 crore.

SEBs, which are required to earn a minimum rate of return (ROR) of three per cent of their net fixed assets in service after providing for all expenses, were currently having a negative ROR, the paper said.

"In case the SEBs are to achieve a break-even ROR in 1998-99, they would have to raise average tariff on an All India basis by 53.4 paise/unit over the current average tariff," it said.

The raising of the average tariff by 53.4 paise/unit over the current average tariff would yield additional revenue of as much as Rs 12,316.2 crore, the paper said.

"For achieving three per cent ROR, the average tariff on all India basis has to be increased by 59.8 paise/unit and it would yield additional revenue of Rs 14,028.2 crore," it said.

Stating that the Ninth Plan capacity addition target of 40,000 mw was likely to fall short of target by over 15,000 mw, the commission said the shortfall was due to various reasons including the poor financial health of the SEBs.

The Ninth Plan had envisaged a capacity addition target of 40,245 mw of which only 7528 mw had been realised in the first two years of the Plan, it said adding that the shortfall could also be attributed to the private sector projects not fructifying.

Though the policy initiatives taken by government for private sector investment in generation and to improve the regulatory framework had been helpful, the Commission said adding adequate private investments would not flow unless the important issue of commercial viability of the SEBs was not addressed.