SECTION V
POWER SECTOR REFORMS
5.1
Policy
Frame
The Power Policy in 1998 adopted by the
Government of Kerala clearly announces the broad frame work of reforms with the
objectives of:
1. Make Kerala a surplus State in
electrical energy
2. Investigate and
develop new sources of energy
3. Renovation and
modernisation of existing old power
plants
·
Financially viable
·
Capable of taking up power projects and completing them in
time
·
Consumer focused and customer friendly
5.2
Power
Sector Reforms- Present Status
Reforms in Kerala State Electricity Board are consistent
with the framework of Kerala Power Policy.
The State Electricity Board has been functionally desegregated and made
accountable in respect of each of their principal functions of generation,
transmission and distribution with a view to creating independent profit
centres. The profit centres headed by
the Members with well-defined roles and responsibilities have become functional
during the year 2000. Appropriate
accounting mechanism for assets, energy and finance will be introduced. The
profit centre head will have full control and delegation of authority on the
functioning of the profit centre.
Energy transactions between the profit centre and that in the basic
account rendering units viz.
Distribution divisions of the Distribution Profit Centre will be closely
monitored and performance evaluation strategies will be established.
Meters have been installed at the
interfaces of the profit centre and profit centre wise energy accounting is in
force w.e.f.15-6-2000. Grid Code to
ensure smooth operation of the system is in place.
K.S.E.Board has approved an I.T. Policy covering all areas of
computeristion and networking H.T./E.H.T. Billing is in the process of
computerisation and LT Billing is being attempted along with the first phase of
enterprise wide computerisation. The
entire computerisation programme is expected to be completed by the end of the
financial year 2002-03.
Bi-monthly spot billing has been introduced
throughout the State. All consumers’
premises are provided with meters.
Primarily,
the restructuring of the distribution sector becomes all the more important
and significant, as this sector is dealing directly with the
beneficiaries/customers. The
Distribution Profit Centre will have three Regional Profit Centres with Head
Quarters at Thiruvananthapuram, Ernakulam and Kozhikode. Electrical Divisions under the Distribution
Profit Centre are the smallest business units, which are accountable for all
the operations including energy transactions within the unit.
As a Pilot Project on restructuring at the Division
level, KSEB has identified three typical Divisions one each under the
categories Rural, Semi-urban and Urban and strategies for implementation are
being evolved.
5.3.1
MOU signed with the Government of India
The Government of Kerala has signed an MOU with the
Government of India on 20-8-2001 with regard to the reforms in the Kerala Power
Sector. The salient features of the MOU
are furnished below.
·
Kerala will complete provision of supply to all households
by the year 2007
·
Kerala will run its power sector on commercial lines. For this purpose, the Kerala State
Electricity Board will be functionally desegregated and made accountable in
respect of each of its principal functions of generation, transmission and
distribution with a view to creating independent Profit Centres by April 2002.
·
Undertake energy audit at all levels to reduce system
losses. This is to be done in a time
bound manner with the following milestones:
·
Metering of all 11 kV and above feeders by October 2001
(95% completed)
·
Energy audit at 11 kV level would be operational by March
2001. A time bound programme for
reduction of T & D losses shall be drawn up and implemented with the
objective of bringing down T & D losses to 17% by December 2004.
·
100% metering of all consumers by 31st December
2001.
·
Kerala will ensure that current operations on distribution reach a break even by 31st
March 2002 and achieve positive returns thereafter.
·
Kerala will undertake computerisation of accounts and
billing in towns by March 2002. This
will make energy audit more effective
·
An effective programme will be launched for identifying
and eliminating power thefts in next two years
·
Kerala will constitute an independent State Electricity
Regulatory Commission by October 2001 and
file tariff petitions by March
2002. Tariff orders issued by SERC will
be implemented fully unless stayed or set aside by Court orders.
·
Kerala has formulated programme for critical transmission links and augmentation of transformation
capacity in the system for better power disposal and utilisation. Schemes to install capacitors in
sub-transmission and distribution for overall improvement in distribution
sectors will be implemented.
·
Kerala will maintain Grid discipline, comply with the Grid
Code and carry out the directions of
Regional Load Despatch Centre
·
Government of Kerala will securitise outstanding dues of
CPSUs as per scheme approved by Government of India. After the securitisation,
Government of Kerala will ensure the CPSU outstanding dues not cross the limit
of 2 month’s billing.
·
Government of Kerala will follow the guidelines on captive
Power Policy as issued by Government of India on 11-7-2001.
·
Government of India will provide funds from APDP for:
·
Renovation and modernisation of Thermal and Hydro
generating units
·
Improvement of subtransmission and distribution and
metering in the identified Circles.
·
Government of
India will assist Kerala in fully exploiting its hydro potential through
development of projects by
(a)
State Sector
(b)
Joint venture of Government of Kerala and CPSUs
(c)
CPSUs
·
Power Grid will assist Kerala to enable it to draw the
power allocated to it from Central generating stations
·
Power Finance Corporation would consider extending
financial assistance to Kerala for meeting the financial needs of Power sector in relaxation of normal
conditionalties relating to exposure limit, ROR and DSCR.
5 .4 Organizational Restructuring
The Committee felt that the Kerala State
Electricity Board is too small an organisation to be unbundled into generation,
transmission and distribution. The
Committee is of the view that multiplicity of the organisations would increase
the overall cost of operation without any corresponding benefits. Under the present juncture when acute financial crunch is faced by the KSEB,
creation of new organisations should be avoided as far as possible. 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. Some of the hydel projects taken up by KSEB for implementation in
the past few years are either stopped or not even commenced due to
disputes/litigations between KSEB and the contractors or KSEB and the public.
It is absolutely essential for KSEB and its legal consultants to move fast as a
dedicated well knit team with the sole objective by resolving the crisis. Needless to say that competent and credible
legal experts are to be engaged to handle the problem.
KSEB has a civil engineering wing with expertise in the area of design,
engineering and construction of hydro projects involving complicated civil
engineering works and structures. Since
the number of hydro projects for implementation is getting reduced year after
year due to difficulty in getting clearances, effective utilisation of the
civil engineering manpower in KSEB has
become a problem. The solution is to
form a separate body for execution of civil engineering projects - hydel,
thermal or any other type. 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 utilizing 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 of outside.
KSEB does not possess
much expertise in the area of development 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.
There are indications that there may be an expansion of
Central Sector Generation in the State by enhancing the capacity of Kayamkulam
thermal power Station of NTPC. The
Kudamkulam Nuclear power station near Nagercoil in Tamilnadu may also become
operational during early IX Plan
period. These developments may see
through the expansion of the EHV transmission network across Kerala, to be
implemented by POWER GRID in the Central Sector. The State should therefore 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. It is desirable that the
distribution and supply in a particular area is managed by a separate
organisation (a co-operative or a company)
under the aegis of the local
administration.
5.5 Finance and Tariff
The financial position of KSEB, the major player in the
area of power development is far from satisfactory. Managerial problems resulting in inefficient operation, excess
man power 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 improvements in the case of generation projects
in the recent past, the overall picture is that of time and cost
over-runs,. While expenditure targets
are achieved in most cases, corresponding physical targets are seldom
achieved. This is especially so in the
case of power transmission projects. There is absolute necessity for improving
technical and financial efficiency as described in the earlier sections.
Another area which calls for immediate
attention is inventory control for which there is no proper system in
KSEB. It is absolutely essential to
take accurate stock of the present
inventory position in the various stores of KSEB and introduce computerised
inventory control so as avoid infructious expenditure in 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 in absolutely essential
for the survival of KSEB. However,
while considering the cost for tariff revision, it would be ensured that 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 a consensus on tariff increase through public discussions at
appropriate levels.