Chandigarh: Haryana power utilities are facing accumulated losses to the tune of Rs 8,830 crore due to sharp difference between the cost of power supply and the rate of return, a top official of the power utilities said in Chandigarh.

Haryana power utilities Chairman and Managing Director Devender Singh said the cost of power supply in Haryana has increased by 330 percent during last ten years against the tariff hike of merely 27 percent during the same period.

"Thus, the gap between cost of supply and rate of return has increased to Rs 2.50 per unit. As a result, the Dakshin Haryana Bijli Vitran Nigam and the Uttar Haryana Bijli Vitran Nigam (Haryana power utilities) are facing an accumulated loss of Rs 8,830 crore," he said in a release.

Singh said the cost of purchase of power has increased in the state by 335 percent, on account of fuel price rise, coal shortage, etc, causing increase in cost of power supply by 330 percent during the last ten years.

On the other hand, there had been only two tariff hikes during this period -- 11 percent in October, 2011 and 16 percent in April, 2012, Singh said.

The total debt of power utilities had reached Rs 19,000 crore while interest burden constituted Rs 1.50 per unit, he added.

"To meet operating expenses, the discoms had to borrow so much that their current interest burden stands at Rs 1.50 per unit," he said.

With Haryana government giving nod to Financial Restructuring Programme (FRP) of power utilties, he said it has given relief to the discoms from the pressure of payment of loans for three years.

The state government has also shared 50 percent responsibility of debt. Under the restructuring, the payment of the remaining principal amount of loans has been deferred for three years.

"With this development, the banks will resume disbursement of loans to the discoms. It is now expected that as a result of FRP, the gap between average revenue realised per unit (ARR) and average cost of supply (ACS) will turn positive over next three years," he said.

Under the strategy for financial turnaround, he said, the power engineers and workers of the discoms have been given a responsibility to reduce the cost of supply by 60 paise per unit by reducing the rate of AT&C losses from present 30 percent to 15 percent during next three years.

Moreover, over next six months, extensive plans have been prepared to undertake capital expenditure for strengthening of distribution infrastructure in rural and urban areas to ensure not only reliability of supply, but enhance reliability of supply.

Singh further said that Fuel Surcharge Adjustment (FSA) is the additional fuel cost that was paid to generating companies but not collected from consumers by discoms in the previous months.

"The electricity bills of consumers form the relevant period did not cover the actual cost of fuel that distribution companies paid to generators to buy power. So, to make up for the loss that discoms suffered, the discoms collect FSA. This is not tariff or a part of the tariff. It ceases to be charged after a specific period, when the recovery of the extra cost on purchase of power is recovered," he said.



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