The State government has authorised the release of ₹ 767.71 crore to the Kerala State Electricity Board (KSEB) as part of taking over 75% of its losses.
In December 2023, the State government issued orders for the take-over of 75% of the loss incurred by the KSEB in the 2022-23 fiscal. Kerala had to meet this condition tied to Power Sector reforms to avail an additional borrowing space amounting to 0.50% of the Gross State Domestic Product (GSDP).
Although the order was issued in December, the money had not been released to the KSEB so far.
The Centre had recently given its nod to Kerala to borrow ₹4,866 crore in return for meeting the conditions to address power sector losses.
The State government’s decision to release ₹ 767.71 crore has brought relief to the KSEB which is being forced to spend huge sums on power purchases this summer. A review meeting convened by the Chief Minister on March 14, the State-run utility was permitted to go in for an additional borrowing of ₹500 crore.
But the KSEB’s plans to borrow from the REC Ltd (formerly Rural electrification Corporation) fell through once the Lok Sabha elections were announced.
Meanwhile, the take-over of KSEB’s losses by the government has sparked a debate on how it would impact consumer tariffs. Power sector sources said it could help soften the impact on consumers in future tariff revisions. A clear picture on this depends on the outcome of the truing-up petition filed by the KSEB for the 2022-23 fiscal which is pending before the State Electricity Regulatory Commission.
