Power utilities no longer dependent on subsidies

BY VL Srinivasan

Published on March 22, 2007

Hyderabad : Dependence of power utilities on the State Government has been coming down gradually thanks to the reforms initiated in the power sector nearly nine years ago.
The State Government has been extending subsidy to the power utilities for supplying power to agriculture sector over a decade to prevent erosion of their net worth after the then Telugu Desam government decided to fulfil its
poll promise of providing subsidised power at a nominal price to the sector.
This, in turn, forced the Government to bear the additional burden of over Rs 3,000 crore in 2000. With the reforms yielding the desired results, the subsidy component has been gradually reduced and stood at Rs 1,047 crore during 2007-08. The decrease in subsidy has been Rs 1,917 crore during this period.
However, there was a marginal hike in the subsidy (Rs 202 crore) in 2004-05 compared to previous year when the State Government announced free power supply to the farmers which burdened the exchequer to the tune of Rs 412 crore.
The turnaround by the power utilities is mainly attributed to the near doubling of the revenues _ from Rs 6,226 crore to Rs 12,291 crore _ in the last five years.
Reduction in transmission and distribution losses, improved revenue collections and improvement, increased internal efficiency, heavy investments in transmission and distribution sector and also stern action against pilferage of power are other reasons for the power utilities faring better.
``Despite rising inflation, the cost per unit of power generation has been controlled by sustained efforts by the staff,'' a senior official told `Express'.
Even the losses, which stood at Rs 1,720 crore in 1999-2000 has been overcome and the power utilities have earned a profit of Rs 291 crore by 2005-06, the official said.