Executive Summary
1. INTRODUCTION
Kerala is relatively poor in energy sources. It does not have any known reserves of coal, oil or natural gas. Its source of heat energy is firewood and that of electricity is Hydroelectric.
The Kerala power system has grown from a modest start of 5 MW capacity of hydro plant in 1940 to an installed capacity of 2473 MW presently. Resource constraints, numerous socio-economic issues and environmental constraints impede the development of power in the State. The exploitable hydro potential is estimated between 10,000 MU and 15,000 MU and the unrestricted demand by the end of the Tenth Plan period will be in excess of 20,000MU. The strategy would therefore be to develop the hydro resources to the maximum possible extent and to look for alternative sources including coal/natural gas based thermal power stations. Considering the need to promote clean energy development, renewed and vigorous effort is required for tapping the non-conventional energy sources at a much faster rate.
There has been a mismatch between generation and transmission & distribution, the gap of which has been widening over the years. The power development for future will therefore have to include steps to provide matching transmission and distribution programme for new generation besides steps to cover the back-log. Another important activity is reduction of T & D losses and improvement in reliability and quality of supply.
2. PRESENT STATUS OF POWER DEVELOPMENT IN KERALA
As already stated, the Kerala power system has grown from an installed capacity of 5 MW in 1940 to an installed capacity of 2473 MW presently. Although the generation is predominately hydel, the KSEB has established two diesel stations one at Brahmapuram at Kochi and the other at Kozhikode. In addition, NTPC and BSES have set up Naptha based thermal plants at Kayamkulam and Kochi. Further, Kerala is entitled to draw its share from Central Sector Stations located outside the State, viz., Ramangundam STPS, Neyveli Lignite Project , MAPP and KAPP.As for transmission, the 220kV network forms the backbone of the EHV transmission system in the State with a 400/220 kV substation at Madakatara (Thrissur) at its centre. The underlining transmission network is at 110 kV and 66 kV.
3. REVIEW OF NINTH PLAN POWER PROGRAMME
Although all villages in Kerala were electrified by 1979, electricity is yet to reach about 40% of the households. The 11 kV to LT ratio is presently around 1:6. The numbers of consumers have grown from 0.28 lakhs to 47.8 lakhs. T & D loss is estimated to be around 21%. The system experiences wide voltage and frequency fluctuations. During the last two decades, the share of domestic and commercial consumption has gone up from 17% to 46%, while the share of industrial consumption has come down from 72% to 35%. This has resulted in sharp increase in peak demand and lowering of load factor.
The average sale rate of energy to consumers is less than the cost of energy. As a result, the internal resources of the KSE Board show a negative balance. For implementation of the projects, the KSEB borrows from various financial institutions, an amount covering the negative balance under internal resources. During the year 2001-02, the total borrowings amounted to Rs.1647 crores. Purchase of power by KSEB for meeting the demand has been increasing over the years with corresponding increase in expenditure which stood at Rs.1956 crores during the year 2001-02.
As for generation, the strategy for the Ninth Plan was speedy implementation of the ongoing projects on priority basis. The revised IX Plan generation programme for KSEB envisaged a generation capacity addition totaling to 613.6 MW besides five reservoir augmentation schemes. The physical achievement of generating capacity addition was 549.1 MW. The shortfall was mainly due to slippage's of Malankara (10.5MW), Kuttiyadi Tail Race (3.75MW) and small hydel schemes of capacity totaling to 12.6 MW proposed to be implemented with the technical and financial assistance of HIC/INSHP, China.
As for augmentation schemes, most of the work on Azhutha and Vazhikkadavu have been completed. Work on Kuttiyadi augmentation although almost complete, further work is held up due to dispute with the contractor. There is not much progress on Kuttiyar and Vadakkepuzha schemes. There has also not been much progress on hydro projects earmarked for private parties.
The IX Plan expenditure for generation projects was Rs.910.25 crores upto August 2001 as against a total plan allocation of Rs.535.53 crores. This has been made possible only by diversion of allocations for System Improvement Works and Renovation and Modernisation and schemes with REC assistance.As regards renovation and modernisation projects, some progress has been made in respect of Pallivasal, Sengulam and Panniar generating stations, while not much head way has been made in respect of other projects. Out of the total allocation of Rs.398 crores for R & M, actual expenditure up to 31.03.2002 was only 135.44 crores due to diversion of funds to normal generation works.
The IX Plan review indicates that there has been time overrun and consequent cost overrun in all the hydro projects completed by the KSEB. However, there has been some improvement in project management lately which has to be sustained and further improved by KSEB.
In the area of transmission and distribution, the objectives set out in the IX Plan document have not been realised. On the transmission side, only about 30% of the targeted works have been completed. However, out of the budgeted allocation of Rs.875.5 crores, an expenditure of Rs.708.42 crores has been incurred showing ineffective utilisation of funds caused by poor monitoring and management control system.
Implementation of the distribution programme went against the strategy of reducing the HT to LT ratio. The implementation corresponded to an HT - LT ratio of 1: 4 which hardly helped to bring down the ratio to the desired level of 1:2 from the present level of 1:6. The achievement in respect of implementation of HT lines and distribution transformers was below 50%. The expenditure on distribution was only Rs.871.36 crores against the allocation of Rs. 1086.53 crores indicating diversion of funds to other sectors.In the area of Non-conventional and Renewable sources of energy, ANERT undertook programmes for supporting implementation of schemes under this category and carrying out investigations, studies and dissemination of knowledge. Out of a total allocation of Rs.119.5 crores for ANERT programme and IREP during IX Plan, an expenditure of Rs.44.88 crores was incurred.
The Energy Management Centre incurred an expenditure of Rs.3.39 crores against an allocation of Rs.4.00 crores for its activities covering efficiency improvement studies, investigations and propagation programmes.
4. TENTH PLAN POWER PROGRAMME
The Committee identified the following thrust areas for the X Plan Power Programme:
- Reduction of system losses
- Effective collection of revenue through correct metering and prompt raising of bills.
- Productivity improvement.
- Reduction and redeployment of staff.
- Improvement in capacity utilisation.
- Elimination of time and cost overruns through appropriate project monitoring management and control.Improvement of efficiency in all operations of the KSE Board has been identified as the major strategy during the X Plan period calling for allocation of adequate resources for the purpose.
The Committee projected a realistic power and energy demand of 3800 MW and 20,800 MU respectively for the State by the end of the X Plan period. After allowing for the availability from existing, ongoing and committed projects , the shortfall in generation capacity by the end of X plan is expected to be of the order of 900MW. This is proposed to be met by the following new projects besides achieving increased capacity through R & M of old hydro stations of KSEB.
New Hydel Projects to be Implemented by KSEB.
Name of Project Installed Capacity( MW) Athirappally Kuttiady, Additional Extention Neriyamangalam Extention Pallivasal Extension
Other Hydro Projects Bhoothathankettu Ullungal Karikkayam Barapole
New Thermal generating capacity by private Sector Participation The recommendation for creation of 500 MW of Thermal Generation capacity with private participation is subject to the following provisions.
- Fuel used for generation should be available at low cost in order to contain generation cost within affordable levels.
- Power purchase agreement should be flexible enough to permit absorption of KSEB's hydro power to the fullest extent.
- Tariff for supply should be the lowest
As regards the transmission programme during the X Plan, the strategy is to complete the following ongoing works on war footing.
Substations 220 kV 110 kV 66 kV 33 kV
Transmission Lines 220 kV 110 kV 66 kV 33 kV
In addition the following new works are also recommended for completion during the Xth plan.
Substations 220 kV 110 kV 66 kV 33 kV
Transmission Lines 220 kV 110 kV 66 kV 33 kV
On the distribution side the Committee has suggested a number of measures for improving the quality and reliability of supply and enhancing revenue collection. Most important among them include:
· Energy accounting at feeder levelThe HT to LT ratio in KSEB system is presently as large as 1 to 6 against the international standard of 1 to 2. The Committee therefore recommends that it should be as minimum as possible and should be progressively reduced to less than one. For this purpose, the allocation for 11 kV lines and distribution transformers is recommended to be increased in lieu of expansion of LT system.
· 100% foolproof metering and installation of quality meters.
· Integrated computerised energy accounting, billing and revenue monitoring.
· Administrative and legal measures to curb theft of energy.
· System improvement measures such as re-routing, reconducting of lines and installation of shunt capacitors.
· Adoption of high voltage distribution system and reduction of HT to LT ratio.
· Automatic meter reading for High Voltage Consumers.
· Computerised metering and billing system.
· Creation of adequate meter testing facility.
· Regular testing of meters.
Under the Xth plan distribution programme, KSEB has proposed installation of meters on secondary of one transformer in each circle. The Committee recommends that the installation of the meters on transformers should cover each typical transformer covering various category of consumers. Further, meter should be installed at least on three distribution transformers in each circle so as to represent high medium and low-density load in the circle. It should also be ensured that provision for sample metering on distribution transformers should include those located in urban and rural areas as well as covering the various categories of consumers.
Based on the discussion above the committee recommends the following outlays for the various programmes of KSEB during Xth Plan
Rs. Crores Generation Renovtion and modernisation Transmission Distribution Load despatch and communication R & D Investigation
In the area of Non conventional Energy Sources the following programmes are envisaged under the aegis of ANERT1. ANERT's own programme
Micro Hydel
Bio Energy
Wind energy
Solar Thermal Energy Programme
Rural Energy Technology
R & D2. IREP
Training
Solar Photo Voltaic Programme
National programme on Improved ChulahThe Committee recommends an outlay of Rs.40.00 crores as State's share for the above programmes during the X th plan.
Under the energy conservation programme during X th plan, the major activities will include R & D in the area, Education and Training Programme, Awarness Programme, etc., which will be carried out by the Energy Management Centre. An outlay of Rs.4.25 Crores is recommended for this programme.
5. POWER SECTOR REFORMS
KSEB is too small an organisation to be unbundled into generation, transmission and distribution. Power sector reforms in Kerala should therefore confine to functional regrouping of the various units under KSEB on independent profit centre concept. While some work has been done in this direction, full-fledged functioning of the functional profit centre units viz.; Generation, Transmission and Distribution is yet to be achieved. Appropriate accounting mechanism for assets, energy and finance is yet to be established. Further, profit centre head should be entrusted with full control and delegation of authority on the functioning of the profit centre.
The Committee felt that on the generation side, KSEB should continue to develop Hydro power in the State. This is especially so in view of the need to give priority to augmentation and extension schemes which have a definite advantage of increasing the storage of the existing reservoirs and increasing capacity with minimum investment. The hydel projects, which were earmarked for private development, which have not been materialized, might be taken back and implemented by the KSEB.
For effective utilisation of the civil engineering manpower in KSEB, creation of a separate body for execution of civil engineering projects hydel, thermal or any other type is recommended. The civil engineers of KSEB may be shifted to this organization which may take up all kinds of major civil works for execution. However in doing so it has to be ensured that the new organisation should be financially self sustainable and may not depend on financial help from the Government. This arrangement would help in utilising the services of the existing civil engineers of the Board to the maximum possible extent especially at a time when there is acute shortage of expertise in the area outside.
KSEB does not possess much expertise in the area of development of thermal power except for two Diesel Generating plants, technology of which is different from coal based, gas based or other fuel based thermal power plants. Under the present situation of acute financial crunch, it may not be worthwhile to create an organisation for thermal development in KSEB. Augmentation of generation capacity through thermal power development may therefore be left to private sector or joint sector. KSEB will however have a major responsibility in co-ordinating the pace of development in association with these agencies to match the growth in demand. While the Independent Power Producers or the Joint Sector Power producers may be given all facilities by the Government for setting up power generating projects in the State, the power purchase agreements for supply of power may not be detrimental to the interest of KSEB. The power purchase agreements should facilitate economic operation of all power plants in the State and should not come in the way of full absorption of hydro power.
As for transmission, the State should concentrate on the lower voltage and sub-transmission networks, while leaving major expansions of EHV transmission network to the Central Sector. For this reason, there may not be any necessity for a separate corporation to look after transmission works. The KSEB may therefore continue to handle the transmission works and concentrate on development of lower voltage transmission and sub-transmission works.
As regards distribution, it may be desirable to part with this responsibility in a phased manner over a period of time. Local distribution can be passed on by KSEB to one or two local bodies in the first instance and if the system works well can be extended to many more local bodies. A separate tariff will have to be evolved for sale of power to local bodies and it could change from one area to another depending on the load mix.
The financial position of KSEB, the major player in the area of power development is far from satisfactory. Managerial problems resulting in inefficient operations, excess manpower resulting in high establishment costs and non viable tariff are the three major causes for the plight of KSEB. In the area of implementation of projects, while there is some improvement in the case of generation projects in the recent past, the overall picture is that of time and cost overruns. While expenditure targets are achieved in most cases, corresponding physical targets are seldom relieved. This is especially so in the case of power transmission projects. There is absolute necessity for improving technical and financial efficiency of the Board. Another area, which calls for immediate attention, is inventory control for which presently there is no proper system in KSEB. It is absolutely essential to take accurate stock of the present position and introduce computerised inventory control so as to prevent infructious expenditure on this account. Further, it is necessary to revise the tariff to various classes of consumers, rationally and futuristically. The extent of revision for each category and the quantum of cross subsidy are matters of detail, but a tariff revision which would enable the KSEB to cover its costs and earn a minimum rate of return is absolutely essential for the survival of KSEB. However, while considering the cost for tariff revision, it would be ensured these are based on reasonable norms of efficiency for technical and financial operations. If tariff revision is appropriately linked with efficiency improvement, it might be possible to arrive at consensus on tariff increase through public discussion at appropriate levels.