ONE of the planks on which the Bharatiya Janata Party is seeking votes in the parliamentary elections is good governance. However, the almost-a-year-old BJP government stands discredited with regard to its policy on the production and distribution of electricity. The States electricity distribution companies have accumulated a deficit of Rs.1,878 crore from November 2008 to February 2009. The reason for this is that the government has purchased electricity from private companies and from Gujarat and Chhattisgarh at market rates to meet the excess demand between November and May every year.
When the BJP government came to power last year, its policy on electricity supply was marred by a series of flip-flops. According to informed sources, the BJP government resorted to buying power from November onwards as the Lok Sabha elections were approaching. The problem with this, the sources say, is that while the provision of electricity has improved (urban areas get 24 hours power supply and rural areas 12 hours supply, including six hours of three-phase power supply used for running irrigation pumpsets), the deficit in the account books of the States electricity boards has increased.
There has been no comprehensive policy discussion to raise additional funds to meet this deficit. Not enough provision has been made for this in the two State budgets presented so far. The Medium Term Fiscal Policy of 2001-05 prepared for the State had recommended that subsidies for the agricultural sector in electricity supply should be done away with over the course of a decade.
According to K. Jairaj, Principal Secretary (Energy), budgetary support will be provided to tide over this massive deficit, but other sources disagree. As the deficit increases, the distribution companies will not have much choice but to approach the Karnataka Electricity Regulatory Commission (KERC) and seek a significant increase in tariffs. This could happen soon after the elections if the monsoon fails as it did last year.
Of the roughly 130 million units (m.u.) of power consumed daily in the State during the peak demand months between November and May, about 40 m.u. are produced from hydroelectric resources and 40 m.u. from thermal sources. About 30 m.u. are sourced from the Central grid and 5-8 m.u. from other sources. The shortfall is between 12 and 15 m.u. a day.
While the cost of production per unit (p.u.) is between 14 paise and Rs.3 for the 115-118 m.u. that the State can rely on, close to Rs.10 p.u. is paid to purchase electricity from private power companies such as Jindal and GMR and from other States to make up the shortfall. With the election process getting under way, the government is unlikely to interfere with the continuous supply of electricity. But the burden of this may be passed on to the consumer in the form of higher electricity tariffs after the elections.
Vikhar Ahmed Sayeed
