'Cover rural power subsidy in Budget'

By S. K. Ramoo

BANGALORE, APRIL 2. The Deepak Parekh Committee, constituted by the State Government to study the issue of escrow cover to independent power producers (IPPs), contrary to popular expectations, has recommended that the sudsidised power to rural regions may have to continue for some more time.

In its report it has pointed out that the Government's decision on how to fund rural power subsidy will be one of the key parameters which will determine the configuration of the planned private distribution system. It is of the view that the rural power subsidy be provided in the State Budget by making the existing arrangement explicit. In other words, it has made it clear that appropriate provisions should be made in the Budget so that in the current transition phase in the power sector reforms, Karnataka's industrial development will not suffer owing to power shortage.

Under the on-going process of power sector reforms, the committee has favoured decentralisation of both generation and distribution of power, especially pertaining to the rural areas. It is of the view that there is a need for reliable and timely power supply to rural regions and that the rural people benefited from the reforms process. The report states that the farmers, irrespective of the tariff fixed, should be assured of quality power during fixed hours every day. It feels that over-loading of rural power lines, as is currently happening, should be avoided and the KPTCL should not consider the rural power consumers with disdain as a low- paying and unremunerative lot.

The report in one of its key recommendations has suggested that the Munirabad, Shivasamudram, Shimshapura and Sharavathi generating stations operated by KPTCL be sold to the KPCL. In a far-reaching recommendation, it has suggested that the KPCL's generation plants, following increase in their value, be sold to IPPs and the resources generated be utilised for reduction of the Government's fiscal burden. It, however, cautions against utilisation of funds generated by privatisation for meeting the increase of its revenue expenditure. The 30 per cent T and D losses of gross energy equivalent to 6,799 million units, is tantamount to lost energy of approximately 1,100 MW of thermal power generation capacity. On account of it, the KPTCL is expected to lose 8,000 million units during the current year. The current energy consumption calculated by the KPTCL at 15,906 million units per annum translates into gross energy demand of 22,704 million units. According to the report, it is imperative for the KPTCL to make a submission before the Regulatory Commission to introduce cost-effective tariffs.

It has foreseen the KPTCL as a transmission utility and system operator which will be carrying out periodical load forecast studies. It will generate revenue by charging for utilisation of its transmission lines.

Hailing the decision of the S. M. Krishna Government for privatisation of power distribution system, it has pointed out that the KPTCL should appoint a professional consultant for assisting in carrying out a number of preparatory measures as part of the implementation process. It has suggested that the existing wheeling power policy in respect of captive generation be extended automatically to other power producers.

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