SEB losses to grow 6.3% in '05-06

The commercial losses of state electricity boards (SEBs) are expected to go up to Rs 22,013 crore in 2005-06, an increase of 6.3 per cent over the estimated losses of Rs 20,715 crore in the current fiscal year.

The rate of return on investments, which was at a negative 27.97 per cent, is expected to go down to a negative 28.13 per cent as per the annual Plan projections, which were quoted in the Economic Survey 2004-05.

The increase in losses is, however, contested by the power ministry. "Unaudited annual accounts should be the documents considered when quoting these figures. Estimates based on annual Plan projections of different state governments do not have any basis," said an official in the power ministry.

"Figures based on audited financial accounts are available only till 2003-04 and the Planning Commission's figures are based on the gap filling approach," he added.

Also, higher losses were a fallout of decisions undertaken by state governments to provide free power to certain sections, low generation in the hydro-power sector, which resulted in the replacement of a cheap source of peaking power with a high-cost source (thermal).

"Decisions taken by state regulatory authorities against allowing increases in tariffs also affected the financial position of SEBs," the official added.

"The resource flow arising out of such poor return is very large. The direct transfers from state governments to SEBs in 2004-05 amounted to Rs 9,825 crore. In addition, there was an uncovered subsidy of Rs 17,520 crore," said the Economic Survey.

The total gross subsidy level of the sector is expected to go up by almost 5 per cent from Rs 34311 crore in 2004-05 (RE) to Rs 36002 crore in the annual Plan projections (AP) for 2005-06 made by the Planning Commission and quoted in the Economic Survey.

Against this, the level of subventions received from the governments is expected to increase by a mere 0.06 per cent from Rs 9,825 crore to Rs 9,831 crore.

Net subsidy, would therefore go up from Rs 24,486 crore to Rs 26,170 crore, an increase of 6.8 per cent.

For the next fiscal, the gross subsidy on account of agriculture is expected to go up by 6.6 per cent from Rs 23,806 crore in 2004-05 (RE) to Rs 25,377 crore in 2005-06. The subsidy on account of sale of electricity to the domestic sector is also projected to go up by 4 per cent from Rs 9,639 crore to Rs 10,033 crore in 2005-06.

The subsidy level on account of inter-state sales is however expected to go down to Rs 591 crore, a drop of almost 2 per cent from the level of Rs 866 crore in 200-05 (RE).