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| No sincere efforts have been made by Government to reduce unmetered consumers & {T&D } losses | | A Look Through the mist | | Daya Sagar
Transmission and Distribution losses {T&D } as disclosed by J J&K K Power Development Department are amongst the highest in the country.. J&K State Electricity Regulatory Commission { J&KSERC } has decided on the petitions No: 19/ 2009-10 & No : 21/ 2010-11 filed for approval of Annual Revenue Requirement (ARR) by the JKPDP. An order to this effect has been passed under no : JKSERC/03 of 2010 on 29th April 2010. The power retail tariff has been revised { by overall nearly 12% upwards. For metered domestic its 14%} for 2010/11.{The petitions were filed as per the J&KSERC Terms and conditions for Determination of Distribution Tariff Regulations, 2005. and the J&KSERC Conduct of Business Regulations, 2005}. Some objections to increase have been made. No doubt the power is being subsidized but people have reasons to object looking at so high a level of inefficiency in managing the power by PDD
PDD had projected for the year 2009/10 the total energy { power } input as 11,032.95 MU { million units / kilowatt hours }.The recoverable sales were projected as 3,775.42 MU only { just 34.2 percent of input }. The Transmission and Distribution losses were expected to be around 7257.53 million units {65.78% of the input}.Similarly for the year 2010/11 the total power input had been projected as 10,081.17 MU { million units }. The recoverable sales were projected as 4286.09 MU only { just 42.52% }. The {T&D } losses were expected to be around 5794.65 million units {57.48%}. The data submitted for 2007 /8 revealed total power input had been 8743.96 MU { million kilowatt hours }, the recoverable sales were 3331.64 MU only { 38.10 % } and the T&D losses were 5412.32 MU {61.90%}. For 2008/9 data revealed total power input as 9147.22 MU , the recoverable sales as 3538.70 MU only { 38.69 % } and the {T&D } losses were 5608.52 million units {61.31%. of the input}. The data revealed that the percentage / proportion of {T&D } losses for 2007/8 and 2008/09 almost remained unchanged although the losses were as large as nearly 62 %. For the year 2009/10 the T&D losses had been projected to increase further {as 65.78 % }. This does reflect the non seriousness of the department towards its plans for improvement of the operational efficiency.
Other significant fact that was revealed from the JK PDD petition to the JKSERC was that during the year 2008/9 inspite of the {T&D } loss being as high as 62 % , still the realizable revenue shown by the PDD was only 75.70 % of sales shown for the year. So if this is taken into account the real unrecovered supplied power {T&Dlosses} would reflect as 70.71 % instead of 61.31.Imagine the level of efficiency of department where the real unrecovered transmission, distribution and revenue losses are as high as 70.71 %.. Even for 2009/10 the factual {T&D } loss would be as high as 69.96 % and not 65.78 percent as mentioned in the petition. Such commercial evaluation becomes necessary particularly where the PDD petition for revision talks of commercials like depreciation, return on capital, interest, operation and maintenance and the like. No doubt for 2010/11 PDD had projected recovery of the level of 92 % was shown { even in this case the real {T&D } losses would around would be 61 percent { actual would known after March 2011 }.. So the operational efficiency of the department has to be taken care while considering the request for tariff revision. But it appears that Jammu & Kashmir State ERC has not that seriously taken notice of this aspect { though made a reference}.
In its petition PDD had proposed an overall average tariff hike of about 62% { to partially bridge the existing revenue gap }. If not value wise, atleast quantum wise the demanded tariff increase {62 %} was like passing on the {T&D } losses { 62 percent } to the consumers. To do so the PDD department had averaged the existing tariff at Rs. 2.34/ kWh {UNIT} and proposed an average tariff of Rs. 3.80/ kWh for 2010-11. Why should the consumer in a democracy pay for the inefficiency of the service departments? Where as the Commission has reworked the sales { considering average tariff for un-metered consumers same as the average tariff arrived at for the metered consumers within each consumer category}. The average exiting tariff for 2009-10 determined by Commission is Rs 2.42/ kWh. The Commission has allowed an average tariff of Rs. 2.70/ kWh for 2010-11 {12% increase over the average existing tariff}. The PDD has worked out the cost per unit as Rs..6.97 where as the average cost at which power is purchased by PDD is just Rs.2.43 per unit { based on the total purchase of Rs2453.68 crore . Any wise considerate mind would not accept it. More over the per unit averaged proposed purchased cost { 2010/11} of Rs.2.43 per unit to PDD too need be tested { since in case the Hydro power production is costing so high it needs an investigative study even at the national level. The mismanagement and time over run costs due to inefficiency could be inflating the cost of production as well }. The Commission in its order has raised serious doubts regarding the correctness and the reliability of the data submitted by JKPDD .But still the JKSERC has kept in view the same cost of Rs.6.97 per unit { and so strangely reworked the cost as Rs. 7.05 } while revising power tariff for 2010/2011. It is surely not convincing.
The other very important aspect that the JKSERC appears to have ignored while ordering retail tariff increase is that the Establishment Expenses that the PDD had debted to the cost of supply was disproportionately high in comparison to {i} revenue realized and {ii} inspite of so heavy management costs the distribution efficiency was very very dismal. To quote the salary component for 2008/09 and 2009/2010 were shown as 37.82 % and 41.70 % of the sales realization. Even for 2010/2011 it was projected as 41.80 percent { Rs. 921.75 crore realizable sales revenue as against Rs. 385.32 crore as Establishment Expenses of staff. } No doubt in the final approvals the establishment cost has been reduced from Rs. 385.32 Cr to Rs. 287.47 Cr , but how it has been worked not been elaborated }.Jammu & Kashmir State Electricity Regulatory Commission was not expected to work as a limb of PDD department and handle the Petition for tariff increase just like a formality. The commission should have rather recommended to the government that there was immediate need for first remodeling / reorganization the working of the PDD as regards the power supply.
No doubt Mr. Abdul Rahim Rather as Finance Minister has the most thankless job in hand. The inefficiency of other departments in revenue and tax realization ultimately adds to the problems of Mr. Rather. Any new taxes and tariff are resented by the public . The resentments the public fall in the lap of the Finance Minister. Recently state government employees went on strike demanding VI th pay commission arrears / benefits. The general impression is that it is Mr. Rather who is not allowing Omar Abdullah to agree the employee demands { inspite of the fact that the government has spent lakhs of rupees in issuing advertisements during the strike period informing the people that the cost of government employees is nearly Rs.11525 Crore { salary bill Rs. 9000 crore, pension bill 1800 crore, DA 725 crore }where as the total self income of JK Sate is hardly Rs.3600 Crore }.So, there is utmost need for increasing the saleable power and reducing the establishment costs.JKSERC has some statutory functions and it must perform.
The T&D losses were approved at 46.7% for 2007-08 for PDD keeping in view the Abraham Committee but losses remained higher. Even for 2008/09 PDD revised its earlier proposed losses from 49.83% to 61.90%.. According to J&KSERC the performance of JKPDD in terms of reduction of T&D loss levels has shown no improvement. Rather there has been an increase in the loss levels for 2009-10.
The non seriousness of the PDD department towards reducing the TD losses reflected from the proposals submitted to JKSERC as regards revising the Minimum Charges for metered domestic power supply. Even the existing minimum / demand charges for connected load were not less than what is in Delhi. But still the PDD had demanded increase ranging from 333 percent to 500 percent for metered connections. { asking to revise the minimum charges for connected load upto 1 Kw from Rs. 40 to Rs.200 per month }. In the same petition the PDD had demanded increasing the flat charges for unmetered domestic connection of 1 kW from Rs.320.00 to Rs. 390.00 only { just nearly 20 percent increase}. Ofcourse the Commission has not accepted the proposals and maintained earlier minimum charges for metered loads. The Commission has approved a higher tariff hike for the un-metered consumers. But why should there be such a large number of unmetered consumers even where the consumer has permanent premises.
The Commission has requested JKPDD to reduce the TD losses by 10% during 2010-11. Commission should have instead directed { like it has directed JKPDD to achieve 100% metering by ending December 2011} the PDP to reduce the losses instead of increasing the power tarrif in general. As per JKSERC even at the unrevised tarrif a ten percent reduction in TD losses would bring in additional Rs. 250 crore income. The private sector generation of resources is very low in JK. The common man and JK private sector more depends more on the expenditure made by the Government on infrastructure, subsidies and employment generation programmes. Therefore any increase in power tariff and in the TD losses badly affects the common consumer in JK. Therefore , it is not a wise step to { under the circumstances } increase the tariff for the common domestic as well as the small commercial establishments. So much of computerization, so much of technology. But still there are large numbers of unmetered connected loads and over 60 percent losses. A just 20 percent cut on losses would make fortunes { Rs500 Cr} for government.Why is it not being done?.
(*Daya Sagar is a senior coloumnist on Jammu &Kashmir Affairs, dayasagr45 @yahoo.com )
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