labels: crisil, investment information and credit rating agency, power
KSEB among 10 worst performing electricity boards in Indianews
Jays Jacob
14 January 2003

Kochi: The central power ministry has ranked the Kerala State Electricity Board (KSEB) among the 10 worst performing boards in the country.

The political decision to roll back the August 2002 power hike and the highly subsidised domestic tariff are among a host of other factors that have been identified as reasons for the poor performance. The ministry has also warned the Kerala government that it has a difficult task ahead if it is to bring the power sector back to an even keel.

The new scoring, announced on 8 January 2003, has bracketed Kerala with Jammu and Kashmir in the 16th position. The KSEB has scored only 32.5 out of 100 in the rating, according the study jointly carried out by Credit Rating Information Services of India Ltd (Crisil) and Investment, Information Credit Rating Agency (ICRA). The KSEB is also the worst performer among other southern states, figuring below Andhra Pradesh (71.5), Karnataka (68) and Tamil Nadu (47.5).

Other states joining Kerala at the end of the rating are Madhya Pradesh, Meghalaya, Sikkim, Tripura, Assam, Nagaland, Manipur, Mizoram, Bihar and Arunachal Pradesh.

The study, mandated by the Power Finance Corporation (PFC) under the Accelerated Power Development and Reform Programme, is aimed at creating a performance framework that will benchmark all states on a common platform.

According to the Crisil-ICRA findings, the Kerala government has not been very supportive in terms of legislation or finances. “The setting up of an independent electricity regulatory commission (ERC) is long overdue and there has been no major legislation to reform the power sector. The government has also not released any subsidy for the last 10 years and is among the worst performing states on this front.”

About operational parameters (generation, transmission and distribution), the rating has given positive marks to the KSEB for its collection efficiency on the basis of self-reported billing in the high-tension sector. While suggesting areas of improvement, the rating said the practice of self-reporting by Kerala consumers has led to inaccuracies in assessing the loss levels within the system.

“A large number of meters, estimated at over 8 lakh, are defective or sluggish. The KSEB, therefore, needs to make significant efforts to improve both its metering and billing efficiencies if it is to reduce the loss levels in the transmission and distribution system. On the generation side, the operating efficiencies are far lower than the better-ranked states and require significant improvements,” the study pointed out.

The notable positive is that efforts are being made to obtain multilateral funding for improving the power sector in the state. A search committee is also in the process of identifying members for the ERC, which is to be set up. The KSEB has begun taking steps towards creating separate profit centres for generation, transmission and distribution.

A precondition for the state’s ranking to improve will be a significant improvement on the state government’s intention to reform the power sector and its subsidy-paying track record, as both are prerequisites to reforming the power sector.

Kerala’s score will also show an improvement if it operationalises its ERC and implements a tariff rationalisation so as to bridge the gap between power purchase costs and realisations, the rating pointed out.

The Crisil-ICRA rating will be used by the power ministry and the PFC for preferential allocation of Accelerated Power Development and Reform Programme (APDRP) funds, interest rate setting or allocation of power to deficit states from the central pool.

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KSEB among 10 worst performing electricity boards in India