Kerala should take over liability of KSEB’s debt to borrow additional fund, centre issues directions
Thiruvananthapuram: The central government has demanded the Kerala government to take over the liability of Kerala State Electricity Board’s debt. It is learned that the centre has come out with the demand as a clause for allowing the states to borrow half percent additional fund.
Privatization of electricity distribution companies and giving subsidy for electricity to consumers through bank account were also included in the revised criteria for states to borrow money.
These directions were given to the states in the letter forwarded by Sumit Agarwal, assistant director of the union finance ministry. In the letter, he has given recommendations to strengthen the centre’s control over the power sector in states and speed up the privatization.
RK Singh, the additional chief secretary of Kerala finance department has received the letter.
It is learned that the Kerala government will discuss the matter soon.
The union finance ministry has placed fresh conditions as recommended by the 15th Finance Commission.
As per the revised conditions, states will be allowed to borrow money for a period of 4 years from 2021-22 to 2024-25.
There are two types of conditions for borrowing money. The first one is the primary conditions that prove eligibility to borrow money and the second one is the conditions to determine the score. The request of states to borrow money will be considered only if they accept the primary conditions.
Among these conditions, taking over the liability of electricity distribution companies is the major one. As per this, the state government should meet 50 percent loss in last year. In Kerala, the electricity board incurred a loss of Rs 2100 cr. If the state government takes half percent additional loan, a fund of Rs 4000 cr will be raised. Hence, over half of the borrowed money will be spent on clearing the electricity board’s loss.
The state is also directed to grant a fixed share to the electricity board each year for meeting the loss in the previous year. From the financial year of 2025-26, the state government should take over the complete liability of the electricity board’s loss. Apart from this, the state is also responsible to give the board’s financial data to the centre.
30 marks as passing score
The states will be eligible to borrow money only after accepting the primary conditions. Apart from this, the states must score above 30 marks to get permission for borrowing half percent additional fund. The states which score below 30 will get a less amount as loan.
20 marks each will be given for installing electricity metre and transferring subsidy to bank accounts. That means the consumer has to pay a non-subsidized bill amount. The subsidy will be transferred to the bank account after clearing the payment. 5 marks each will be given if the local bodies avoid bill arrears and introduce new technology in the power sector. 25 bonus marks will be given for privatization in electricity distribution.
This year, Kerala would not need to privatize the electricity distribution for scoring 30 marks. But it would be mandatory in the coming years to be eligible for borrowing additional money. Hence, the state will be forced to avoid cross-subsidy and initiate privatization in the sector.