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Lok Sabha polls and rising mercury to hit finances of Kerala Electricity Board

M Sarita Varma
kerala, lok sabha polls, lok sabha polls 2019, kerala state electricity board

Rising mercury and Lok Sabha elections are threatening to hit finances of the Kerala State Electricity Board (KSEB) hard. The KSEB, which suffered `850-crore damages during floods of 2018, is staring at a yawning revenue gap of Rs 1,100 crore in the current fiscal.

The board’s predicament is that it can sell power that it purchases at Rs 9 per unit, only at an average tariff rate of Rs 2.5 per unit. It has urged the State Tariff Regulatory Commission for a 10% tariff hike, but in view of the Lok Sabha Elections, the state government has shied away from tariff hike. Another option is load shedding. However, state power minister MM Mani has categorically said there would be no load shedding during this summer.

Following the unprecedented surge in temperature, the average daily power consumption in the state is expected to cross 85 million units (MU) soon, compared to last year’s peak average daily power consumption of 80.54 MU, sources told FE. Already, it has gone up from 73 MU per day last week to 77 MU.

The KSEB meets about 85% of the demand through procurement from power exchanges. Kerala’s maximum transmission capacity would be to purchase 68.3 MU. The average purchase from the power markets has been about 61.286 MU, a senior KSEB official said.

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Kerala has reported a 46% rainfall deficiency so far in 2019. The surge in summer heat causes a double whammy for the KSEB. One, its staple hydel power, which costs Rs 1 per unit, is drying up. Two, the increased use of fans, air conditioners and water coolers forces purchase of power at eight times the cost of hydel power.

After the met department’s forecast that Kerala would see an increase of 2-8 degree Celsius in the maximum temperature, the State Disaster Management Authority came out with heat wave cautionary directives.
KSEB’s projected revenue gap for 2019-2020 is `1,399 crore. In the wake of higher consumption of high-cost power without the cushion of tariff hike, this revenue gap is likely to be larger, sources said.