With the state electricity board projecting a steep increase in the annual revenue requirement (ARR) for 2012-13 filed with the State Electricity Regulatory Commission, mainly on account of rising power purchase and government employee cost, a huge hike in the power tariff in the hill state is inevitable.

As against the expenditure of Rs 3,069 crore approved by the commission for 2011-12, the board has projected a revenue requirement of Rs 4,040 crore for the coming financial year. The revised estimates project the revenue requirement for the current year itself at Rs 3,833 crore. The additional burden on account of the true up for the first control period comes to Rs 712 crore. If the commission allows the ARR as it is, the average power tariff will go up by Rs 1.50 per unit to touch Rs 6 per unit.

Apart from the ever-increasing employee cost, which is the highest in the country, the sharp increase in the power purchase cost has pushed up the expenditure. As against the approved power purchase cost of Rs 1,629 crore for 2010-11, the revised cost for the current year comes to Rs 2,254 crore and it is projected to go up further to 2,264 crore next year. Similarly, the employee cost is projected to go up from the approved Rs 845 crore for 2010-11 to Rs 1,071 crore for the current year and further to Rs 1,270 crore next year. If the commission allows the cost as it is, the per unit employee cost will zoom to Rs 1.70 per unit.

The board has been raising short-term loans to bridge the revenue gap of Rs 1,500 crore and as a result the interest burden has been increasing.

Worse, the interest on such loans is not admissible and thus the commission is not likely to include it in either the true up for the last control period or the annual revenue requirement. As such the true up amount will be curtailed by about Rs 400 crore.

With the consumption within the state going up sharply due to rapid industrialisation following the grant of an industrial package to the state, the quantum of power available for sale outside the state is decreasing. The inter-state sale of power has declined from 1,705 million units (MU) in 2010-11 to 1,472 MU in the current year and is projected to go further down to 1,186 MU. Accordingly, the revenue from the inter-state sale will dwindle from Rs 264 crore to Rs 174 crore.

The total sale within the state will increase from 6,641 MU in 2010-11 to 7,501 MU in 2012-13 with the maximum rise in the large industrial power supply from 3,993 MU to 4,537 MU, followed by high-tension supply from 2,169 MU to 2,498 MU and extra high-tension supply from 1,824 MU to 2,039 MU. The government is already providing a subsidy of Rs 167 crore to keep the tariff for domestic consumers at a reasonable level and it will have to increase the quantum of subsidy, particularly in view of the fact that it is an election year.

Article is taken from The Tribune online edition

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