World Bank calls the bluff of Kerala State Electricity Board

Thiruvananthapuram: The World Bank seems to have either overestimated the KSEB or has called the bluff of a power utility that never tires of demanding a tariff hike. According to a World Bank report titled ‘More power to India: The challenge of electricity distribution,’  the KSEB is one of the top power utilities in the country when it comes to financial indicators like the ratio of revenue to operating costs (the second best), accumulated profits without subsidy (the best) and profits after tax (the third best).

The WB’s rosy picture does not, however, tally with the KSEB’s assessment of itself.  Its annual statement for 2014-15 says it is so financially wrecked that only a 33 percent tariff hike will allow it to break even. The WB applauds the KSEB’ profitability but the utility says it has a revenue deficit of '2,931.21 crore. In fact, according to KSEB figures, the deficit has widened by 105 percent in a year so that only a huge  tariff hike could pull it out of the red.

The WB has also used questionable data. It says that in 2011, Kerala had the lowest distribution losses, at about 12 percent, similar to the best international practices. The reality was that in 2011, the distribution loss was more than 16 percent. Even now the state’s distribution loss remains at 15.35 percent.

Further, the WB report says that the KSEB is working to improve employee efficiency. The figures put out by the National Planning Commission say that the KSEB has the worst employee productivity, better  than only north-eastern states. The number of KSEB employees per million units of electricity sold is 1.92, more than the national average of 1.12.

The WB is also silent about the KSEB’s record in augmenting the state’s power capacity. In the last seven years, the state could manage only a minuscule seven percent increase in installed capacity; from 2313.7 MW in 2007 it raised the capacity to only 2486.7 MW in 2013. Here is how other states fared over the same period: Tamil Nadu (55 percent), West Bengal (65 percent), Karnataka (79 percent), Gujarat (178 percent).