Discoms seek tariff hike
Navneet Sharma [email protected]
CHANDIGARH

PLEA TO HERC Electricity distribution firms project R7,755-crore revenue gap

Power rates in Haryana are among the highest in the region, but the stateowned power utilities are seeking to increase them further.
Power distribution companies Uttar Haryana Bijli Vitran Nigam (UHBVN) and Dakshin Haryana Bijli Vitran Nigam (DHBVN) have approached the Haryana Electricity Regulatory Commission with a request to hike power tariffs for the financial year 2012-13, showing a colossal revenue gap of Rs 7,755 crore.

Though the two distribution companies have not proposed revised power rates, the commission has been requested to approve a suitable tariff hike to ensure recovery of the accumulated deficit and address their “poor financial health”.

The projected revenue gap for 2012-13 is about Rs 5,800 crore and the balance amount of Rs 1955 crore is deficit left uncovered in the previous years, according to the annual revenue requirement (ARR) filings made by the two discoms before the power regulator last week.

The two companies have estimated rural electrification (RE) subsidy requirement of

Rs 3,421 crore for supply of electricity to the agriculture sector at reduced rates. If allowed, the proposed tariff increase will be a double whammy for the consumers as an application for imposition of fuel surcharge on the consumers to recover additional Rs 1,560 crore incurred on short-term power purchases in 2010-11 is also before the commission.
The two power utilities have made the tariff hike request after a nod from the state government. UHBVN and DHBVN, which are facing liquidity crunch, had in September 2011 sought the state government’s permission to move an application before the regulator for a revision in tariffs. Power minister Capt Ajay Singh Yadav had in an interview to Hindustan Times indicated that the government was strongly considering revising tariff and had even asked the distribution companies to study the power rates in neighbouring Delhi and Punjab.

Though the Centre has also asked the state governments to take the steps to increase the electricity charges to improve their financial health, mismanagement and inefficiencies are primarily respon

sible for the present fiscal crisis in power companies and their difficulty in raising funds from banks on account of poor balance sheets.
“Poor fiscal planning and efficiency levels have led to complete erosion of paid-up capital of the two distribution companies. Their credit rating has suffered, resulting in costlier shortterm and long-term loans. The commercial losses continue to be on the higher side. The expenditure has been tardy and failed to yield results. As a result, the more power gets pumped into the distribution system, the higher the losses,” according to an energy sector expert who has examined the functioning of the two discoms.

The regulatory panel had recently attributed the “sorry state of affairs” to lack of supervision by senior officers of the distribution system, large, inflated and unrealistic annual investment plans and unachievable targets/schedules for activities such as approval of schemes, fund arrangements, tendering and execution are drawn, resulting in non-execution of works and under utilisation of approved funds every year. The total technical and commercial losses have also not improved significantly. In DHBVN, the AT&C losses have come down by 1% from 25.94% to 24.74% in the past four years.