Date:09/05/2003 URL: http://www.thehindu.com/2003/05/09/stories/2003050902890400.htm

Southern States - Karnataka

Govt. to 'buy' power on behalf of farmers

By Divya Sreedharan

BANGALORE May 8. The ever-increasing power subsidy bill has forced the State Government to adopt a "purchaser-provider model" and form an Agricultural Power Subsidy Management Committee (APSMC) to monitor the situation.

A Government Order (GO) of April 25 is intended to implement what the Chief Minister, S.M.Krishna, said in this year's budget speech about power reforms.

As per the model, the Government will pay subsidy based on actual agricultural consumption. In other words, it will buy power on behalf of farmers by paying subsidy.

This is meant to "make subsidy transparent and linked to subsidised categories and discipline the electricity supply companies (escoms)".

The GO involves a memorandum of understanding (which APSMC will frame) to be signed by the Government, the Karnataka Power Transmission Corporation Ltd. (KPTCL) and the escoms.

The APSMC will review the power supplied to the agriculture sector by each escom, cost against estimates for that year and that of the previous year, recovery of dues from farmers, and "rigorously" monitor power sector reforms as per the World Bank-aided Karnataka Economic Restructuring Programme.

But what will the committee achieve? The GO says revenue collection efficiency in 2003-04 must increase from the present 86 per cent to 100 per cent.

Yet the KPTCL Managing Director, K.N.Srivastava, himself admits that recovery from farmers is just 10 per cent although they consume one-third of the power generated.

The order calls for 2 per cent "measurable reduction" in technical and commercial losses this year.

But the KPTCL, in a review petition before the Karnataka Electricity Regulatory Commission, said it could not cut losses from the present 30.6 per cent to 28 per cent.

The GO says budgetary support must be "within the framework of the revised Financial Restructuring Programme (FRP) and linked to actual outcomes". But it admits that in the past, subsidy requirement exceeded budget provisions and FRP.

The model will succeed only if power supply is limited to 80 million units (mu) a day in the State.

In February, a World Bank report said limiting power purchase to 80 mu a day would save Rs. 100 crore.

On May 6, the energy required was 98.48 mu and consumption 83.03 mu.